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Strategy

SABIC's strategy responds to transformative shifts in the chemical industry and aligns with the goals of Saudi Vision 2030.

Despite facing near-term pressures such as soft demand, oversupply, and economic uncertainties, the chemical industry remains an attractive sector, with growth consistently outpacing global real GDP. The industry spans four primary segments: petrochemicals, agri-nutrients, specialties, and industrial gases. Success in these sectors hinges on a combination of advantages, including scale, global reach, cost, portfolio, technology, and functional excellence – with people and their capabilities at the heart of it all.

However, the industry is in flux, reshaped by broader megatrends, including China's transformative drive for structural self-sufficiency, changing trade dynamics, a growing focus on sustainability, the energy transition, digitalization, and shifting demographics. These trends have implications for the chemical industry in several ways. Asia is becoming a demand engine for chemicals globally, fueled by rapid industrialization, urbanization, and rising consumption across key sectors. China is strengthening self-sufficiency through supportive policies and technological advances. Petrochemicals growth is increasingly tied to liquid feedstocks, resulting in oversupply, rising competitive intensity, and greater commoditization. The rise of the U.S. as a vigorous energy and feedstock hub, coupled with structural competitiveness challenges in Europe, is creating regional disparities. The need to help address climate change has heightened demand for recycled and low-carbon products. Localization has also gained momentum, with a focus on localized manufacturing and supply chains. At the same time, rapid technological advancements are driving efficiency and growth across the sector.

Saudi Arabia is undergoing rapid transformation, driven by the priorities of Saudi Vision 2030. This progress is creating opportunities for the localization of chemicals production and global chemical growth by leveraging Saudi Arabia's strong emphasis on sustainability and support from the country's leadership. Additionally, Saudi Aramco's advancing downstream strategy offers meaningful synergies with SABIC, particularly in chemicals and liquids-to-chemicals growth, both within Saudi Arabia and globally.

SABIC's corporate strategy takes into account the company's position, industry dynamics, and the aspirations of Saudi Arabia and shareholders. Guided by our aspiration to be the preferred world leader in chemicals through Chemistry that Matters™ for all stakeholders, we aim to strengthen our position as a leading company, underpinned by a relentless focus on shareholder value creation.

SABIC BUSINESS MODEL

STRATEGIC LEVERS:

Our strategy is driven by four levers: transformation, portfolio management, growth, and value creation.

TRANSFORMATION

Transformation is the priority lever of our strategy. SABIC recognizes the need to transform to remain competitive and resilient. The first phase of this transformation, carried out from 2015 to 2023, has already delivered value. Building on this foundation, we launched a new transformation program in 2024 to address emerging challenges across both external and internal contexts. This program focuses on enhancing cost efficiency and functional excellence while addressing underperforming businesses, functions, and regions. It is supported by our ongoing digital transformation, which acts as a key enabler for driving efficiency. This SABIC-wide transformation program is sponsored by the CEO with the aim of developing detailed transformation initiatives and a bankable plan to capture, realize, and sustain the company's full potential, driven by structural capability enhancements. The program also integrates with and leverages other strategic efforts, including the SABIC-Saudi Aramco integration program and SABIC's benchmarking initiative, to ensure alignment and maximize impact.

PORTFOLIO MANAGEMENT

The second key strategic lever of our strategy is to enhance SABIC's core portfolio while potentially exiting or monetizing the non-profitable or non-core portfolios. These efforts aim to sharpen management focus, recycle cash from divestments into growth, and boost overall return on capital employed (ROCE).

For the core portfolio, we will drive progress through improvements in customer centricity, focusing on connectivity, streamlined interactions, and further technical services for products and applications. We will enhance our technology position to develop unique products and applications. We will also address carbon neutrality, the growth of our circular product offerings and sales, and the development of emerging low-carbon businesses such as low-carbon ammonia and methanol.

For the non-profitable portfolio, we will transform it for profitability, exit, or monetize. For the non-core portfolio, we will consider selective exit or monetization.

GROWTH

Our third strategic lever is growth. We aim to invest selectively in highly attractive projects aligned with our core portfolio and growth regions, leveraging regional competitive advantages such as feedstock, capital efficiency, and market access. To achieve this, we will create win-win partnerships with regional and global chemical companies. As the chemicals arm of Saudi Aramco, SABIC will also enable Saudi Aramco's downstream strategy through investments, sales and marketing, technology licensing, manufacturing support and servicing, and infrastructure sharing, creating value for shareholders.

VALUE CREATION

Our value creation lever is underpinned by the other three levers, each interconnected with the others to drive our progress – creating a better company through transformation, a more focused company through portfolio management, and a stronger market and industry leader through growth. Our business value creation happens through competitive returns on capital employed and internal rates of return (IRR), as well as shareholder value creation through consistent dividends and strong total returns. At the same time, we will maintain an appropriate risk profile with a robust, efficient balance sheet designed to navigate the cyclical nature of the chemical industry.

_{Disclaimer: This abridged interactive version of the SABIC Integrated Annual Report 2024 is based on the original PDF report published on this website. In case of any discrepancy, the original PDF report will prevail.}

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Integrated Annual Report 2024