CAN HO REPORT & ACCOUNTS 2012 l w E ANNUA l EOP P PEOPLE WHO CAN ANNUAl REPORT & ACCOUNTS 2012 www.sabic.com “WHEN I GET HOME FROM WORK, IT FEELS GOOD TO KNOW I HAVE SPENT THE DAY DOING SOMETHING THAT IMPROVES PEOPLE’S LIVES.” Sabic Report + Accounts 2012 1 WELCOME wE’VE ALWAYS BElIEVED THAT IT TAKES SPECIAl PEOPlE TO MAKE A DIFFERENCE. THEY NEED INGENUITY, BRIllIANCE AND THE FREEDOM TO TURN THEIR IDEAS INTO REALITY. AT SABIC, THIS IS OUR CUlTURE. wE FIND OPEN-MINDED, GIFTED AND QUESTIONING PEOPlE. THEN wE CREATE THE CONDITIONS FOR THEIR TAlENT TO FlOURISH: FUlFIllING wORK ENVIRONMENTS, STATE-OF-THE-ART TECHNOlOGY AND THE EMPOWERMENT THEY NEED. THIS wAY, SABIC PEOPlE CAN FIND THE NEw SOlUTIONS AND POSSIBIlITIES THAT ARE CHANGING THE wORlD FOR THE BETTER. EVERY DAY, THEY CAN CREATE CHEMISTRY THAT MATTERSTM. PRINCE SAUD BIN ABDULLAH BIN THenayan AL-SAUD MOHAMED AL-MADY CHAIRMAN VICE CHAIRMAN & CHIEF EXECUTIVE OFFICER Sabic Report + Accounts 2012 3 SABIC’S experts create 150 NEw products EVery YEAR THIS IS Ingenuity Sabic Report + Accounts 2012 5 CONTENTS OVERVIEW 8 this IS SABIC & STRATEGY 9 CHAIRMAN’S statement 10 VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER Q&A 01 12 BOARD OF directors 14 GlOBAl operations OUR 18 CHEMICAlS BUSINESSES 24 PERFORMANCE CHEMICAlS 30 INNOVATIVE PlASTICS 36 POLYMERS 42 FERTILIZERS 02 48 METALS 54 SUPPlY CHAIN 55 MANUFACTURING 56 TECHNOlOGY & INNOVATION OUR 60 SUSTAINABILITY COMMITMENT 62 PEOPLE 64 ENVIRONMENT, HEALTH, SAFETY & SECURITY 66 CORPORATE SOCIAl 03 RESPONSIBILITY OUR 70 FINANCIAl STATEMENTS FINANCES 75 NOTES TO THE ACCOUNTS 91 OUR Manufacturing COMPANIES 04 95 GlOBAl DIRECTORY OVERVIEW & strategy WE HAVE firmly SET OUR SIGHTS ON BECOMING THE PREFERRED WORLD lEADER IN CHEMICAlS. Sabic Report + Accounts 2012 7 01 THIS IS SABIC KEY FACTS ND 40,000 2 lARGEST DIVERSIFIED 80+ GlOBAl operations employees CHEMICAl company IN THE wORlD SR25BN SR338 NET PROFIT BN SR189BN total ASSETS SALES REVENUE 15 0 NEw PRODUCTS EACH YEAR SABIC IS formed OF CHEMICAlS performance CHEMICAlS 6 innovative PlASTICS Strategic polyMERS FERTILIZERS BUSINESS metals UNITS Sabic Report + Accounts 2012 9 OVERVIEW & STRATEGY CHAIRMAN’S STATEMENT PRINCE SAUD BIN ABDUllAH BIN THENAYAN Al-SAUD A BOLD VISION IS what INSPIRES SABIC peoplE. First of all, I would like to thank all our employees for their excellence and commitment in helping SABIC continue to achieve its ambitions. In 2012 SABIC’s people have again proved their ability to deliver strong performance across our businesses, in the face of difficult and turbulent economic conditions. Our growth, from humble beginnings in 1976 to our position today as one of the world’s largest integrated petrochemical companies, has been rapid. And we have no intention of stopping here. with our new strategy, SABIC 2025, we have firmly set our sights on becoming the preferred world leader in chemicals. SABIC will become a more global and market-facing company, with our growth driven by differentiated solutions in sectors such as transportation, construction, electronics and packaging. we will build our strength in innovation, creating new materials and possibilities, and finding more efficient processes for bringing them to market. And we will continue to form strong partnerships with like-minded organizations to enhance SABIC’s worldwide strength and reach. Despite our global ambition, we nonetheless remain committed to our roots in the Kingdom of Saudi Arabia. SABIC will continue its important role in advancing the Kingdom’s industrialization program and will engage in helping Saudi Arabia to address its energy dilemma through sustainability initiatives. we plan to achieve all of this through the focused commitment of our people and our belief in their ability to create Chemistry that MattersTM – solutions and products that make the world a better place. The journey to SABIC 2025 will not be an easy one. But we have a history of taking on the toughest challenges and winning. A bold vision is what inspires SABIC people, and I have every confidence in their ability to make it a reality. PRINCE SAUD BIN ABDULLAH BIN THENAYAN AL-SAUD CHAIRMAN OVERVIEW & STRATEGY VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER Q&A MOHAMED Al-MADY OUR NEw strategy, SABIC 2025, wIll MAKE THE company MORE integrated, MORE differentiated AND MORE GlOBAl. Q. LOOKING BACK at 2012, trend to continue. Our success depends innovation plays a key role in developing WHat KIND OF YEAR HAS IT on being able to provide customers with solutions for our customers. And we will BEEN FOR SABIC? the choices they need, and this in turn form powerful partnerships to build our A. Our performance in 2012 revealed depends on adequate feedstock. expertise and reach. Finally, SABIC will the true strength of SABIC. Despite align with the Kingdom of Saudi Arabia’s extremely challenging market Q. IN THIS CHALLENGING industrialization strategy. Above all, we conditions, we maintained a strong ENVIRONMENT, WHat DO YOU are conscious that in rapidly changing financial performance, with net profits SEE AS SABIC’S KEY INNOvatiON world markets and with natural of SR 25 billion on sales of SR 189 billion, OPPORTUNITIES? HOW WILL YOU resources under pressure, we need to and assets of SR 338 billion. This has take advantage OF THEM? be innovative, efficient and sustainable also been a year of milestones. We have A. In developing our SABIC 2025 in everything we do. entered into important new large scale strategy, we carefully examined the projects in Saudi Arabia and China. mega-trends that impact our industry Q. SO HAS SUstainabiLity RISEN The Sinopec SABIC Tianjin Petrochemical and SABIC in particular. From this UP ON SABIC’S AGENDA? Company (SSTPC) laid the foundation analysis, we identified several focus A. Sustainability is at the top of our for a polycarbonate production complex areas and innovation platforms. agenda. It touches every one of our in Tianjin, China. To support Saudi Alternative feedstocks are particularly businesses and operations. From my Arabia’s economic diversification and important. we are emphasizing point of view, it is good for the job nationalization programs, SABIC specialty chemicals derived mostly from environment and good for business. and ExxonMobil affiliates announced naphtha and other associated heavy Given today’s pace of change and a synthetic rubber project in Al-Jubail feedstocks, as well as aiming to build resource constraints, sustainability must through their existing joint venture, a global lead in the use of CO2 and be part of a company’s overall growth KEMYA. This will provide new industry hydrogen, both of which also have strategy if the business opportunities and markets in the important sustainability benefits. is to be successful for the long term. automotive and construction sectors, Other avenues of innovation include In the chemical industry in particular, and support development of the alternative energy, light-weighting, sustainability credentials are our license workforce in Saudi Arabia. we launched functional fluids and key process to continue to do business. And our our first Sustainability report as part technologies where excellence customers want sustainability too: for of our overall global commitment to is required. example, solutions that cut their energy responsible, sustainable business practices footprint during manufacturing, by and opened the doors to our new Q. SABIC’S stated VISION IS TO reducing both the weight and thickness of SABIC Academy – the center for BECOME THE PREFERRED WORLD their products, or materials that are more developing our employees’ abilities, LEADER IN CHEMICALS. HOW DO recyclable and include post-consumer allowing them to acquire knowledge YOU PLAN TO ACHIEVE THIS? recycled content. Together with and gain wider experience in developing A. Everyone at the company takes this improvements to our processes – from their abilities. vision very seriously. Our new strategy, smoother supply-chain performance to SABIC 2025, will make the company re-using waste materials – these initiatives Q. HOW DO YOU VIEW THE more integrated, more differentiated have reduced our carbon footprint. OUTLOOK FOR THE GLOBAL and more global. we will work on PETROCHEMICALS INDUSTRY? developing competitive feedstock Q. YOUR 2012 REPORT PLACES WHat ARE THE MAJOR TRENDS? sources around the world, while growing GREAT EMPHASIS ON THE A. Our industry has always been fiercely our global presence with a focus on IMPOrtance OF PEOPLE. WHat competitive and the current economic rapidly developing and emerging STEPS DOES SABIC take TO INVEST environment ensures it will remain so. economies. we will become more IN ITS EMPLOYEES? We’ve seen much consolidation over market-facing, offer differentiating A. SABIC’s people are our most the past five years and I expect this technology platforms and ensure important resource. It is their ingenuity Sabic Report + Accounts 2012 11 and dedication that is at the heart of our competitive advantage. we’re particularly proud in 2012 to have formally opened the SABIC Academy in Riyadh. Equipped to develop employees’ management skills as well as technical expertise, it is further, concrete evidence of our commitment to people. More broadly, for all employees we offer on-the-job training, which incorporates professional certifications, team building, project management and coaching. SABIC people have the opportunity to attend courses, seminars and conferences, both inside and outside the company. we work with Saudi Arabian and international universities to both find and develop future talent, and run courses for our employees. Q. CLEARLY SABIC HAS A STRONG CULTURE AND STRONG CONVICTIONS. COULD YOU SUMMARIZE WHat THE BRAND REPRESENTS? A. Compared with our long-established competitors in Europe and the Americas, SABIC is a young brand, just a few decades old. we are investing in building the power of our brand and expect to see a return on this investment over time. Chemistry that mattersTM articulates what the SABIC brand stands for: it encapsulates the ingenuity of our people, our strong relationships with our customers, and the ways in which SABIC products influence the lives of people around the world.