ANNUAL REPORT 2019 Realizing the Kingdom’S Vision for the Future
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ANNUAL REPORT 2019 Realizing the Kingdom’s vision for the future CONTENT CHAIRMAN'S MESSAGE 04 CEO'S MESSAGE 06 SHAREHOLDERS 08 BOARD OF DIRECTORS 12 MANDATE & VALUES 14 INVESTMENT THESIS 16 SECTORIAL FOCUS 18 INDUSTRIAL METALS 20 DOWNSTREAM CHEMICALS 22 AUTOMOTIVE 24 POWER 26 INVESTMENT PORTFOLIO 28 ANNEX 32 GOVERNANCE 34 FINANCIAL STATEMENTS 44 DUSSUR ANNUAL REPORT 2019 1 KING SALMAN BIN ABDULAZIZ AL-SAUD HIS ROYAL HIGHNESS PRINCE MOHAMMED BIN SALMAN BIN ABDULAZIZ AL-SAUD The Custodian of the Two Holy Mosques Crown Prince, Deputy Prime Minister and Minister of Defense of the Kingdom of Saudi Arabia 2 DUSSUR ANNUAL REPORT 2019 3 CHAIRMAN’S MESSAGE During 2019, the Kingdom of Saudi This approach stems from our conviction Despite its short tenure, Dussur has Although this pandemic created Arabia made tangible progress and belief that such sectors will have developed significantly since its numerous challenges in the business towards realizing its vision of building the utmost impact in supporting and inception, giving us an exemplary and environment, it also presents new a diversified and flourishing economy. enabling transformative industries in unique operating model. This is evident opportunities which we intend to Moreover, Dussur has worked - since the Kingdom. in our highly capable management team carefully study and take advantage of its inception - towards being a key with extensive knowledge and experience through intelligent and coordinated contributor to this vision. Since its During 2019, Dussur was successful in in the industrial investment arena, in planning with our partners. launch in 2017, Dussur spared no effort adding another key investment to its addition to the significant support it to deliver on its mandate of building existing investment portfolio through enjoys from its key international and Finally, I would like to extend my sincere the Kingdom’s industrial landscape and our investment in establishing the highly reputable shareholders, namely, thanks and appreciation to the Kingdom supporting the pillars of our economy in Saudi Engine Manufacturing Company the Public Investments Fund, Saudi of Saudi Arabia’s visionary leadership for line with “Vision 2030”. (SEMCO) in partnership with Hyundai Aramco, and the Saudi Basic Industries their continued support to investors, in Heavy Industries (HHI), and Saudi Company (SABIC). general, and to the industrial investment Dussur’s talented and specialized team Aramco, to manufacture two-stroke sector specifically with due care focused on structuring and executing and four-stroke marine and Electric Notwithstanding the significant and guidance. This is evident in the impactful investments targeting the Power Plant (EPP) engines, and marine challenges the global economy faces recent government support initiative development of transformational pumps. These products will be used after the outbreak and repercussions announced in the first quarter of the industries. Dussur aims to enable the in propelling commercial sea vessels, of the COVID-19 pandemic, we are fiscal year 2020 to support the private private sector, technology transfer, electric power generation, cargo oil fully confident that we will continue sector in Saudi Arabia, providing a create sustainable jobs four the nation’s pumps, and offshore rig pumps. This our march towards achieving our clear indication of the attractiveness youth, and make a tangible contribution new addition will mark Dussur’s second mandate with the unparalleled of the investment environment in the to the Kingdom’s GDP. investment following its distinguished support we are getting from our wise Kingdom. Appreciation is also due to partnership with General Electric in the Government Leadership. In fact, the our shareholders for their continued We strive to continue our journey and area of gas-powered electric power recent developments only stand to support, my colleagues on the Board of develop new strategic partnerships generation turbines. show the importance of achieving self- Directors, and all Dussur team members founded on our principal approach of sustainability for key supplies. who exerted distinguished efforts in creating added value to our national 2019. I look forward to continuing Mr. Mohammed Abunayyan economy, forging strong partnerships, our journey to new achievements and Chairman and investing in transformative successes in 2020. industries in the key sectors charted in our strategy: industrial metals, specialty chemicals, automotive manufacturing, and power. DUSSUR IS BUILDING THE KINGDOM'S LANDSCAPE AND SUPPORTING THE PILLARS OF OUR ECONOMY. 4 DUSSUR ANNUAL REPORT 2019 5 CEO'S MESSAGE Since its inception in 2017, the The efficacy of our strength stems In addition, in 2019 we focused striving in the process to contribute to shareholders of Dussur and its from our focus on a specific mandate on building and enhancing our the industrial goals stated in “Vision leadership paid great attention in of executing value-added investments distinguished human capital through 2030”, and outlined in the National laying the foundations of success for in the transformational industries, in several key strategic initiatives to Industrial Development and Logistics this thriving organization that carries the areas of industrial metals, such improve the working environment Program (NIDLP). We will move forward a pivotal mandate of developing the as, steel, aluminum, and titanium, and Dussur’s appeal to national talent diligently to develop vital industries transformational industries in the and the areas of specialty chemicals, seeking opportunities to enhance that will support the national economy, Kingdom; an industrial segment that is automotive manufacturing, and power. their skills and capabilities, and the provide promising industrial investment considered a key bottleneck in localizing In carefully utilizing these abilities, joy of success and appreciation for opportunities, and create thousands of the value chain in numerous critical and we contribute towards supporting achievements. sustainable jobs. strategic industries. local efforts to build a resilient and diversified national economy that Moreover, in spite of the enormous Finally, I would like to emphasize that In 2019, we exerted great efforts on complements the global economy. challenges facing the global economy our success in achieving the mandate all fronts to ensure that our strategy in light of the COVID-19 pandemic, bestowed upon us would not have and goals are aligned with and During the past year, we worked on Dussur’s team is working diligently and been possible with the valuable complementary to the Kingdom’s enhancing Dussur’s operational model purposefully to increase our institutional support we receive from our Board, “Vision 2030”. We also instituted a and restructuring the governance readiness to study all investment and our shareholders, and the efforts and working model that is based on the function in the organization. The operating risks, and reprioritize our work capabilities of our team, whom I thank best practices in the area of industrial company embarked on forming a fully- to find the best fitting opportunities in for their continued dedication to the investment both regionally and globally. fledged Enterprise Risk Management the current economic climate. vision of Dussur and effecting its This is what places Dussur today in an (ERM) function which will provide contribution to our national economy. advanced position and fully prepared a comprehensive risk management Moving forward, we will continue with to play the role of the strategic investor framework for Dussur and proactively our local and international partners to that enables the transformational manage operational and strategic risks, enable the development of industrial industries in the Kingdom. in addition to enhancing compliance metals, specialty chemicals, automotive with both internal and external manufacturing, and power sectors, Our key strength is embodied in our regulations. Dr. Raed Al-Rayes strategic investment approach, our highly Chief Executive Officer capable human capital, our portfolio size, and our international partnership network that is supported by the size and power of our shareholders. WE WILL MOVE FORWARD DILIGENTLY TO DEVELOP VITAL INDUSTRIES THAT WILL SUPPORT THE NATIONAL ECONOMY. 6 DUSSUR ANNUAL REPORT 2019 7 Shareholders Khurais Oil Plant 8 DUSSUR ANNUAL REPORT 2019 9 SHAREHOLDERS ABOUT OUR SHAREHOLDERS Each founding shareholder offers Over many decades, Dussur’s exceptional value to Dussur beyond shareholders have been at the core of financial strength, with their Saudi Arabia’s industrialization journey, expertise, experience, insights, and playing a critical role in the economy networks, giving the company a and creating countless employment head-start in its mission to support opportunities. They have unparalleled the development and diversification experience of successfully working with objectives in Saudi Arabia. international partners to create world- class joint venture companies. PUBLIC INVESTMENT FUND SAUDI ARAMCO* SABIC (SAUDI BASIC INDUSTRIES For more than 48 years, the Public Saudi Aramco is a fully integrated, global CORPORATION) Investment Fund (PIF) has been a petroleum and chemicals enterprise Ranked among the world’s largest leading economic player and has in Saudi Arabia. Over the past 80 petrochemical manufacturers, SABIC OVER MANY DECADES, DUSSUR’S contributed to the development of years, it has become a world leader in