Petrochemicals industry faces challenges, uncertainty remains: SABIC CEO

Abdulrahman Al-Fageeh, CEO of Saudi Basic Industries Corp. (SABIC)

The petrochemicals industry faces challenging operating conditions, as disappointing demand in Saudi Basic Industries Corp.’s (SABIC) target markets pushed product prices lower at the year end. As the first quarter of 2024 is looming, there is still much uncertainty, CEO Abdulrahman Al-Fageeh said in a statement.

He added that SABIC conducted a comprehensive overview of its portfolio and identified the path towards sustainable value creation, indicating that the announced liquidation process of Hadeed is proceeding as planned.

This optimal exploitation of internal resources will enhance the company’s primary focus on petrochemicals, Al-Fageeh said.

SABIC is pursuing a number of initiatives to address the competitiveness of its European assets and ultimately seeks to achieve a sustainable and modern footprint in the region, the CEO said.

He indicated that SABIC remains steadfast in its pursuit of future growth despite short-term market challenges, as the positive final investment decision on Fujian provides a clear signal of its commitment to developing a strong position in key geographies such as China.

The company also aims to achieve long-term growth across every core operating segment, Al-Fageeh said, adding that it is committed to exercising strong capital expenditure discipline with a well-drawn plan to deploy between $4 billion and $5 billion in 2024.

The year 2023 was full of challenges shaped by lackluster macroeconomic sentiment, weak end-user demand, and a wave of incremental supply for a large suite of products, the company said, indicating that this caused the average selling price to fall by 21% year-on-year (YoY), while sales volumes went down by 2% YoY.

Despite the economic and industrial challenges, SABIC slashed its sales cost by 16% YoY through controlling fixed manufacturing costs together with the implementation of optimization initiatives.

In addition, the petchem major strives to maintain dividend distributions to its shareholders while working to ensure that this commitment does not affect its strong balance sheet.

Furthermore, SABIC continues to focus on implementing operational excellence programs, achieving carbon neutrality targets, and transforming its business to maximize returns while meeting market challenges.

The petrochemical producer logged a SAR 2.8 billion loss in 2023, against a SAR 16.5 billion profit in 2022, according to Argaam's data.