SABIC ANNUAL REPORT 2017 01 Overview and strategy Our commitment Chairman’s Statement 12 Corporate Social Responsibility 48 At SABIC, we believe in the CONTENTS Vice Chairman and CEO’s Human Capital 50 14 Statement Innovation and Business 52 Enabling Saudi Vision 2030 18 Development power of chemistry to make Compliance and Risk Management 56 Our Board of Directors 20 Environment, Health, Safety 58 Global Operations 22 and Security the world a better place. Our businesses Manufacturing 62 Supply Chain 64 Petrochemicals 26 Sustainability 66 Specialties 27 By driving performance for Agri-Nutrients 28 Directory Metals 29 Manufacturing Companies 70 customers, ensuring long-term Our core markets Global Directory 74 Transportation 32 Agri-Nutrients 34 dependability and building Construction 36 Medical Devices 38 Packaging 40 valuable relationships, we put Clean Energy 42 that power to work. We call it Electrical and Electronics 44 ‘Chemistry that matters™’. Page 05 Page 18 SABIC supports the Saudi SABIC hosts pioneering Vision 2030 drive for Human Resources Forum national economic in Riyadh transformation Page 32 SABIC innovation enables prize-winning panel for new Mini car Page 36 Applied brainpower helps architects and builders construct a better future Page 38 Page 42 Smarter materials that empower those Helping square the working to enable circle of limitless needs, better, longer lives limited resources Page64 Making our supply chain more effficient, sustainable and responsive SABIC 02 ANNUAL REPORT 2017 03 AT A GLANCE ASSETS We and our customers are working together to create a better future. Whether it’s cutting weight to save pollution or developing materials to help bring water to remote communities, the ingenuity, innovation and bn sheer dedication of our people are changing things for the better. NET INCOME $86 PATENT PORTFOLIO FILINGS AGRI-NUTRIENTS SABIC’s supplies to customers throughout the Middle East, Asia, bn 11,534 Africa and the Americas help meet $4.9 the world’s ever-growing need KEY GEOGRAPHIES for food. WITH INNOVATION HUBS Find out more on page 28 PETROCHEMICALS SABIC makes the essential 5 chemical building blocks for materials used in everything from packaging to healthcare to household goods. Find out more on page 26 SCIENTISTS COUNTRIES 1,400+ 50 PRODUCTION SALES EMPLOYEES 34,000+ $39.9 bn SPECIALTIES SABIC produces a wide range of specialty materials, from engineering m tons METALS 71.2 thermoplastic resins to additive manufacturing solutions. SABIC’s high quality metals have been key to the construction and Find out more on page 27 industrialization of some of the world’s fastest growing economies. Find out more on page 29 04 05 LEVERAGING GLOBAL STRENGTHS TO DRIVE LOCAL SUCCESS SABIC hosted a pioneering Human Resources Forum in Riyadh this year, supporting the government’s commitment to workforce development Maintaining SABIC’s long legacy of working with the government to develop skills and support the creation of local employment, the forum provided a platform for exchanging knowledge and expertise, and a catalyst for the transformation in human resources that is key to the achievement of Vision 2030. Key take-outs included the establishment of a “Human Resources Think Tank” in Saudi Arabia, which will allow for more exchange of views and experiences in the field of human resource development; the signing of a Memorandum of Understanding on preparing students for the labor market by developing their skills and potentials; initiation of a SABIC Academy training program for top Ministry of Labor officials; and an agreement to share experiences and knowledge on global best practices. 06 07 TURNING BAD WATER INTO GOOD SABIC expertise is at the heart of a simple device that turns bad water into good water – anywhere in the world Cerafiltec’s vision of an all-plastic water-filtration module had been repeatedly called “impossible” – but SABIC begged to differ. Using NORYL™ resin, a polyphenylene ether material chosen for its excellent hydrolytic and dimensional stability and chemical and high-temperature resistance, the new module houses multiple high-performance silicon-carbide membranes in a device that can turn seawater, freshwater, even industrial wastewater, into clean, healthy drinking water. Also, it delivers this at one-seventh of the cost of traditional metal-framed devices – and lasts twice as long. 08 09 SMART FARMING WITH SPECIALTY AGRI-NUTRIENT This year saw sales up 100 percent for SABIC’s specialty agri-nutrient product, NPK, combining nitrogen, phosphorus and potassium The product, developed through years of intensive research in collaboration with Riyadh’s King Saud University, addresses a basic but important issue for farmers not just in Saudi Arabia but throughout the region, and even further afield: improving the performance of a mainstay agricultural resource – date palms. By increasing the efficiency of nutrient delivery, based on the specific needs of the palms, the product benefits farmers in multiple ways: enhancing yields, improving crop quality, minimizing seasonal crop fluctuations, and streamlining application by combining four nutrients in one. SABIC 10 ANNUAL REPORT 2017 11 OVERVIEW AND STRATEGY CHAIRMAN’S STATEMENT 12 VICE CHAIRMAN AND CEO’S STATEMENT 14 SAUDI VISION 2030 18 BOARD OF DIRECTORS 20 GLOBAL OPERATIONS 22 SABIC 12 ANNUAL REPORT 2017 OVERVIEW AND STRATEGY 13 CHAIRMAN’S STATEMENT I do not believe it is any exaggeration to draw direct comparisons between the scope and scale of the changes we are now undergoing, in the form of the Over the course of the journey, SABIC Transformation, to those which saw the SABIC has contributed enormously creation of the company back in 1976. We embarked on a phenomenal journey then. Now, we are to the development of the Saudi embarking on another, no less phenomenal. Nor economy. We have generated DR. ABDULAZIZ are we alone in this. Our transformation has been very substantial revenues. SALEH ALJARBOU undertaken very much within the context of the larger transformation journey encompassing the We have created tens of thousands Chairman nation: Vision 2030. of meaningful and sustainable jobs. Vision 2030 is the Kingdom’s response to the fundamental challenge facing our nation: over- dependence on oil revenues. Our country’s leaders understand all too well that the oil reserves are finite, and no basis for its future over the decades – and centuries – to come. If there is one imperative success, we will play a major part in helping facing us all – nation and company – it is this: diversify. the Kingdom drive Vision 2030 to meet its goals and objectives. The Board and myself are fully I would like to begin this, my first annual report our nation, in everything from helping grow the We at SABIC have been diversifying now for many committed fully to making this a reality. letter, by extending my thanks to His Highness food we eat to playing an important part in the years. We have, as just one example, invested Prince Saud bin Abdullah bin Thenayan Al-Saud and construction of the magnificent buildings that have heavily in the skills of our people and the intellectual I and my fellow Board members extend our other former board members for their leadership made our cityscapes some of the finest in the world. property they have created. These complement our full support to SABIC’s leadership, and reiterate and many years of service and dedication, which our confidence in its commitment and Our success – and our achievement – is visible immense strength in commodity chemicals with have played such a crucial part in helping to make capabilities, as we embark on this exciting, everywhere you look. Now, we are entering a new innovative materials – lighter, stronger, tougher and SABIC what it is today – one of the world’s leading transformational journey. era, calling for redoubled efforts to build on that more versatile – which are playing a crucial role in global chemical companies. success and take it to the next level. leading edge applications in some of the most We will work with our leaders, our people and I would also like to extend a warm welcome to dynamic and exciting areas of the new economy. our external stakeholders to pursue our The global business environment is becoming SABIC’s new Board members. I am confident that Areas such as advanced medical devices – transformational agenda with focused energy more challenging – and more volatile. At the same they will work with me and our Vice Chairman and particularly to meet the needs of the world’s and smart innovation, overcome the challenges time, this volatility, and the limitless webs of CEO, Mr. Yousef Al-Benyan, in support of our growing elderly populations – and portable we face, and forge ahead to an even more super-connectivity that link economic and financial managers and our people here in the Kingdom technology – to meet the insatiable appetite successful future. systems and people all over the world, open new and around the world, to make SABIC’s bright for new functionality and innovative design vistas of opportunity. Global energy markets are Together, we will work to leverage from future a reality. among the young. at the very heart of this new era of volatility, not ‘Chemistry that Matters™’, achieve SABIC’s 2025 SABIC has come a long way since its inception in least in adjusting to the new realities of shale, We are now reinforcing and supplementing our strategy, and fulfill our vision of becoming the 1976. I vividly recall the days around 40 years ago and the issue of climate change. materials diversification strategies with others, such world’s premier provider of chemicals. when I was fortunate enough to become part of as geographical expansion. Later in this report, Such changes, of course, represent a major the first family of SABIC. We have worked long and you will find details of our ambitious overseas challenge not only to SABIC, but to the Saudi hard in pursuit of that dream; we have benefited acquisition program, whereby we will strengthen economy as a whole.