Leadership Statements - Chairman

One of SABIC’s chief priorities is securing the long-run investment returns for its shareholders, and we at SABIC brought several key projects to their fruitful realization in 2022 toward this end.

– With our partner ExxonMobil, we successfully started up the Gulf Coast Growth Ventures facility—our first major greenfield petrochemical investment in the Americas.

– At Jubail on the Arabian Gulf, we started commercial operations of our new ethylene glycol plant, enabling us to maintain our world-leading position in the manufacture of this commodity chemical.

– And to underscore how much more sustainable economic growth we expect to spring from that part of the world, we opened our new, energy efficient, carbon-neutral building in Jubail.

Of course, modern facilities do not guarantee profits. But I have great confidence that SABIC can skillfully manage its assets around the risks that hide in the complex dynamics of global supply and demand.

SHORT-TERM & LONG-TERM OUTLOOK

Indeed, it is well known that our industry’s business outlook is inextricably coupled to the ups and downs of the global economy. And in 2023, it is expected that global GDP will decrease by 1.5% and the ethylene operating rate will drop by 2% while inflation, though moderated, remains high. So SABIC cannot become complacent during the good times. For when the tough times arrive, SABIC will have to either bear their impact or sidestep them. And that is the reason why we are reprioritizing a set of initiatives to make the company’s performance more resilient and agile. These initiatives address our manufacturing reliability, cash-flow management, and cost rationalization.

There are growth opportunities that transcend business cycles, however. And to seize them SABIC will once again rely on the strength and longevity of its business relationships. Our association with Saudi Aramco in particular readily opens up avenues of cooperation through which deeper and broader synergies can be realized. These synergies lie at the heart of a few bold new projects - in Poland, in Malaysia, and in Saudi Arabia - that were announced in 2022. We can further harness these synergies in accordance with SABIC’s business strategy, which seeks to sustainably create value from the development of people, the protection of our planet and the prosperity of national economies.

That said, a key element of our business strategy - particularly in times of rising capital costs - is rigorous discipline in our capital investments. And given the current state of the global economy, we prudently held back a significant percentage of the capital expenditure that we originally had planned for 2022.

But if we intend to run a responsible and profitable business for the long term, then we also must incorporate environment, social and governance (ESG) considerations in all our investment decision-making. So we are strengthening internal processes and systems to assure SABIC’s ESG compliance from the Board of Directors down to the factory floor.

NATIONAL CHEMICALS CHAMPION

By assessing not only its ESG but also its economic performance within a comprehensive governance framework, SABIC can continue to rightfully champion the Saudi chemicals industry in the context of Saudi Vision 2030. In so doing, it does not shrink from advocating what it thinks is in the best interest of its stakeholders when it comes to mandatory disclosures, rating agencies, environmental assessments, and carbon accounting.

Greenhouse-gas emissions are a case in point. In 2021, we made a public commitment for all operations under our control - not just Saudi based ones - to be carbon neutral by 2050, taking into account different national circumstances. And as an early milestone towards this goal, we aim for an interim 2030 target of having 20% fewer emissions (relative to 2018).

In the long run, however, we set our sights on reducing the emissions along the entire value chain of our products - from the feedstock that comes into our manufacturing facilities to method of the products’ disposal. This is much more complex, because it involves our suppliers and our customers, and their suppliers and customers. It also entails building a common understanding among policymakers, regulators, and financiers.

It is under this broader carbon-neutrality imperative, for example, that SABIC signed a sponsorship and innovation-partnership deal with Formula E. The deal aligns with our BLUEHERO™ initiative, which seeks to deliver optimal solutions for automotive battery systems. It should also help to uphold the SABIC brand, which is recognized as being the second-most valuable in the global chemical industry.

OUR KEY SUCCESS FACTORS

It cannot be left unstated that our continued success would not be possible without the visionary leadership of Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al-Saud, and His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al-Saud, the Crown Prince and Prime Minister. In addition, we thank HRH Prince Abdulaziz bin Salman bin Abdulaziz Al-Saud, Minister of Energy and his ministry for the ongoing support.

On behalf of the Board of Directors, I also want to take this opportunity to acknowledge the men and women of SABIC for their dedication and commitment as well as SABIC’s customers, partners, suppliers and contractors for their constructive support. Because of them, SABIC’s shareholders have good reason to be optimistic about the future.

GROWING TO WIN

SABIC is entering a new phase of evolution from which business growth can take off in the long term irrespective of short-term business cycles. We will preserve the strength of our financials as an uncompromising objective, establish tighter collaborations, develop new technologies, and cultivate a new generation of visionary leaders - all imbued with sustainability.