JEDDAH, 7 June 2005 — The current and planned investment for Saudi Basic Industries Corp.’s (SABIC’s) production expansion totals more than SR30 billion ($8 billion) and in order to improve the company’s overall position and competitiveness, it anticipates additional worldwide investments to increase annual production to more than 60 million tons by 2008.
According to SABIC’s Annual Report 2004, a record production volume in 2004 has enabled SABIC to rank as one of the world’s largest exporter of granular urea; second largest producer of ethylene glycol, methanol and MTBE; third largest producer of polyethylene; sixth largest producer of polypropylene; and overall the fourth largest producer of polymers.
SABIC is active in all the world’s important markets and continues to focus on global growth opportunities that can deliver improved operating results in the years to come.
Prince Saud ibn Abdullah, chairman of the SABIC board of directors and chairman of the Royal Commission for Jubail and Yanbu said “Today, more than 80 percent of petrochemical exports from the Arabian Gulf region are produced and shipped by SABIC. Our potential for growth has never been greater, as we focus on expansion of the company’s activities in the Americas, Europe, Asia and the Middle East.”
SABIC has come a long way since its creation in 1976 to diversify and consolidate Saudi Arabia’s non-oil business. The company has faced many challenges on its way to becoming a key contributor to the Saudi economy.
“SABIC is part of a rapidly diversifying Saudi economy and plays a prominent role in the country’s continuing industrialization. SABIC products have created numerous downstream businesses in Saudi Arabia and tens of thousands of new jobs for Saudi citizens,” Prince Saud said.
“Global economic expansion appears to be sustaining its momentum, with annual growth at a steady 4 percent expected in 2005. This is best global economic performance since the late 1070s. We can expect a corresponding and sustained increase in demand for our petrochemical products in all major regions. Global demand for polyolefins is expected to increase annually by 7 percent through 2008,” SABIC’s Vice Chairman and Chief Executive Officer Mohamed H. Al-Mady said.
SABIC’s expansion activities underway or announced in 2004:
• Construction began on new petrochemical plants in Yanbu to produce 3.8 million tons per year of ethylene, ethylene glycol, and polyethylene and polyethylene products, to come on stream in 2007.
• Further expansion at the Eastern Petrochemical Company (SHARQ) will add 2.9 million tons per year of ethylene, polyethylene and ethylene glycol by 2008.
• Saudi Petrochemical Company (SADAF) announced plans to build a third, world-scale styrene plant to increase its production capacity by over 60 percent and make it the world’s largest single-complex producer of styrene.
• SABIC announced the construction of a linear alpha olefins plant which will be constructed at Jubail by United Petrochemical Company (UNITED) and is scheduled for completion in 2006.
• SABIC signed four agreements to increase steel production at the HADEED affiliate in Jubail. By 2006, annual metals production will increase to 5.5 million tons of long and flat steel products, up from 3.9 million tons at the beginning of 2004.
SABIC’s report said the company’s profits grew at a record-breaking pace in 2004. SABIC recorded net profits of SR14.2 billion ($3.8 billion), an increase of 112 percent over the precious year. Revenues from product sales increased to SR68.5 billion ($18.4 billion) to become the largest and most profitable public company in the Middle East.
Earnings per share increased to SR47 ($12.53) in 2004, compared to SR22 (5.86) in 2003. Likewise, return-on-equity increased to 31 percent in 2004, compared to 18 percent in the previous year. Total assets at the end of 2004 exceeded SR125 billion ($33 billion).
SABIC’s market capitalization at the yearend was more than SR375 billion ($100 billion). In 2004, the value of SABIC shares, listed on the Saudi stock market, increased 170 percent. SABIC now operates 20 manufacturing sites around the world, producing a broad range of products.
SABIC also launched an e-sourcing initiative in 2004 - the first online bidding system for supplies in Saudi Arabia.
The company’s concern for the well being of its employees is also evident in the excellent safety record of SABIC affiliates. “In 2004, we achieved an excellent safety performance record, with more people working safely than at any time in the history of the company,” Al-Mady said.
Meanwhile, Prince Saud ratified payment of dividends totaling SR3.2 billion to company shareholders at SR8 per share for the company’s operations during the first half of 2005. Right of Share vesting shall be for shareholders as at June 30, 2005. Distributed dividends represent 16 percent of the company’s paid-up capital.
