Saudi Basic Industries Corporation Riyadh, Saudi Arabia

Transcription

1 DECEMBER 11, 2013 CORPORATES COMPANY PROFILE Saudi Basic Industries Corporation Riyadh, Saudi Arabia Table of Contents: COMPANY OVERVIEW 1 BUSINESS DESCRIPTION 2 MANAGEMENT STRATEGY/PRIORITIES 4 FINANCIAL HIGHLIGHTS 5 CAPITAL STRUCTURE AND DEBT MATURITY SCHEDULE 7 COMPANY MANAGEMENT 9 OWNERSHIP STRUCTURE 9 SUBSIDIARIES 10 SECTOR/INDUSTRY PEER GROUP 10 RELATED WEBSITES AND INFORMATION SOURCES 10 MOODY S RELATED RESEARCH 10 Analyst Contacts: Company Overview Saudi Basic Industries Corporation (SABIC) is an industrial conglomerate whose principal operations include the manufacture, marketing and distribution of petrochemicals, fertilisers and metals. SABIC operates in over 40 countries, and has 60 manufacturing and compounding plants across the Middle East, Asia, Europe and the Americas, as of 31 December For the 12 months ended 30 September 2013, SABIC reported revenue of SAR189.9 billion. SABIC is a Saudi joint stock company established in 1976 by Royal Decree. Its shares have been listed on the Saudi Stock Exchange (Ticker: SABIC). Its largest shareholder is the Kingdom of Saudi Arabia (KSA), which owns 70% of total share capital. Source: Company Reports (annual report Dec 2012, Q3 report Sept 2013), Saudi Stock Exchange, Moody s research, Moody s Financial Metrics LONDON James Thomson Associate Analyst james.thomson@moodys.com Francois Lauras Vice President - Senior Credit Officer francois.lauras@moodys.com DIFC David G. Staples Managing Director - Corporate Finance david.staples@moodys.com This report, exclusively provided to you by Moody s, presents a convenient summary of as reported, publicly available information. The information, with the exception of financial data, is not adjusted for Moody s analytic purposes. For Moody s Ratings, Opinion and Analytics on this company, please [Click here]. To access the latest Moody's Credit Opinion on this company, please [Click here].

2 Business Description SABIC is a diversified global industrial conglomerate, headquartered in Saudi Arabia, whose principal operations include the manufacture, marketing and distribution of petrochemicals, fertilisers and metals. SABIC is a joint stock company established in 1976 by Royal Decree. In 1984, the company sold 30% of its share capital by initial public offering, the KSA retained the remaining 70%. Subsequently, SABIC has expanded both organically and inorganically, with key acquisitions including the integrated petrochemical operations of Netherlands-based DSM (2002); the UK petrochemicals business of Huntsman (2006); and GE Plastics (2007, later renamed SABIC Innovative Plastics). These transactions significantly expanded the company s geographical representation throughout the Americas, Europe and the Pacific region. More recently, the company entered into a series of cooperative agreements and joint ventures (JVs) to further expand its petrochemicals business. These included initiatives to enable access to emerging markets such as China, with the formation of the 50:50 JV Sinopec SABIC Tianjin Petrochemical Company (SSTPC), with China Petroleum & Chemical Corporation (SINOPEC) in May 2011, to build a new polycarbonate plant in China (to come on stream in 2015). Concurrently, SABIC completed major petrochemical expansion projects in the KSA, with the Yanbu National Petrochemical Company at Yanbu (Yansab plant) and capacity expansion of the Eastern Petrochemical Company at Al-Jubail (Sharq plant) both coming on stream in In addition, the Saudi Kayan petrochemical complex in Al-Jubail was commissioned in October 2011, becoming the first producer of polycarbonate in the Middle East. The group continues to expand its operations within the KSA, through a JV agreement with Exxon Mobil in June 2012 for the Saudi Elastomers Project in Kemya, which will produce synthetic rubber, expected start up in late In March 2013, jointly with Ma aden and Mosiac, SABIC also agreed to develop a fully integrated phosphate production facility. SABIC operates in more than 40 countries with nearly 40,000 employees, and has 60 manufacturing and compounding companies in locations across the Middle East, Asia, Europe and the Americas, as of 31 December The company operates through the following three business segments, which consist of 6 business units: Chemicals: This segment comprises four business units: Chemicals, Polymers, Performance Chemicals, and Innovative Plastics.» Chemicals: This business unit makes up the majority of the group s total production (accounting for over 60% of total production by value in 2012) and includes four product lines: olefins and gases (ethylene, propylene, butadiene, butane-1, nitrogen, oxygen, argon); aromatics and chloralkali (benzene, styrene monomer, ethylene dichloride, vinyl chloride monomer, caustic soda); glycols (monoethylene glycol, diethylene glycol, triethylene glycol); and oxygenates (methanol, MTBE). These chemicals are used in a wide variety of industrial and commercial products.» Polymers: The majority of SABIC s polymers product line is accounted for by polyethylene and polypropylene production, which are used in refrigerators, computers, car parts, industrial food 2 DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

3 packaging and waterproof film. The company also produces polyvinyl chloride (PVC), polyethylene terephthalate (PET) and polystyrene.» Performance Chemicals: This business unit operates through three divisions: base products (such as acetic acid and acetone); functional chemicals (dioctyl phthalate, iso-butyraldehyde and 2-ethyl hexanol); and functional polymers (thermoplastic elastomer, polybutadiene, ethylene propylene diene monomer and carbon black). These products are used in wide range of industries, including automotive, construction, appliances, consumer goods, electronics, packaging, chemicals, food, textile and pharmaceutical. The group also operates two specialty products companies, Saudi Carbon Fiber Company and SABIC Industrial Catalyst Company (SABCAT).» Innovative Plastics: Its product portfolio includes approximately 40,000 products in five areas: thermoplastic resins; specialty compounds; film and sheet products; additives and intermediates; and coatings. These products are used across the automotive, electronics, transportation, healthcare, lighting and building and construction industries. The segment s key markets include Europe, the US, Middle East and Asia Pacific. For the last twelve months (LTM) to September 2013, the overall Chemicals segment accounted for 90.5% 1 of company revenue. Fertilisers: Accounting for 3.3% of company revenue in LTM September 2013, this segment comprises fertiliser products, including ammonia, urea and phosphates, as well as compound and liquid fertilisers manufactured at the company s three KSA-based facilities: Saudi Arabian Fertiliser Company (SAFCO), Al-Jubail Fertiliser Company (Al-Bayroni) and National Chemical Fertiliser Company (Ibn Al-Baytar). The group also extended its fertiliser production in 2012 with the launch of the Ma aden Phosphate Company joint Venture, in which SABIC has a 30% stake. The Fertilisers segment produces around 6.6 million metric tons of fertiliser annually. Metals: The segment comprises long steel products, including concrete reinforcing bars, plain wire rods and coils, steel billets and light sections, including channels, angles and squares; and flat steel products, including hot and cold rolled steel, galvanised and colour-coated items and steel slabs. It operates mainly through a wholly owned KSA-based affiliate, Saudi Iron and Steel Company (Hadeed). Its key markets include the KSA and other Gulf Cooperative Council (GCC) Countries. 2 During 2012, it produced 5.6 million metric tons of metal. In LTM September 2013, the segment accounted for 6.2% of company revenue. Source: Company Reports (annual report Dec 2012, Q3 report Sept 2013), Company data, Moody s research, Moody s Financial Metrics 1 Throughout this section, such percentages are calculated by excluding Corporate which includes corporate operations, technology and innovation centres, investment activities and SABIC Industrial Investment Company (SIIC). 2 The GCC comprises the Kingdom of Bahrain, Kuwait, the Sultanate of Oman, Qatar, the Kingdom of Saudi Arabia and the UAE. 3 DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

4 EXHIBIT 1 Revenue by Segment (in SAR Million) 250, LTM 09/13 200, , ,000 50,000 0 Chemicals Fertilisers Metals Note: Chemicals includes chemicals, polymers, performance chemicals and innovative plastics Segments excluding Corporate Management Strategy/Priorities The company s vision is to become the world leader in chemicals, with a focus on providing quality products and services through innovation, as well as expansion into new markets and maximising shareholder value. Consequently, in 2012, it launched SABIC 2025, a strategic initiative intended to make SABIC a more global and market-facing company with its growth being driven by differentiated solutions in sectors such as transportation, construction, electronics and packaging. Within this strategy, the company recognises the importance of developing competitive sources of alternative feedstock around the world, as well as placing emphasis on specialty chemicals derived mostly from naphtha and other associated heavy feedstocks. SABIC s intention is to grow its global presence, with a focus on rapidly developing and emerging economies, while continuing its role in advancing the KSA s industrialisation. Source: Company Report (annual report Dec 2012), Company data, Moody s research 4 DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

5 Financial Highlights Overview Company Type: Exchange Listing: Fiscal Year End: Financial Filings: Auditor: Public Saudi Stock Exchange: SABIC December Capital Market Authority (CMA) Ernst & Young Note: The financials presented below have been adjusted for Moody s analytic purposes. To see how adjustments have been made, please see Moody s Financial Metrics, a fundamental financial data and analytics platform that offers insight into the drivers of Moody s Corporate ratings. EXHIBIT 2 Selected Adjusted Financial Data Saudi Basic Industries Corporation (in SAR Million) LTM as of 3Q13 31-Dec Dec Dec-10 Income Statement Revenue/Sales 189, , , ,970 Gross Profit 69,348 67,296 73,277 58,912 EBITDA 57,285 55,544 61,431 49,147 EBIT 44,131 42,672 50,479 38,998 Interest Expense 3,329 3,866 4,336 4,503 Net Income 24,191 23,975 28,489 21,026 Balance Sheet Cash & Cash Equivalents 61,070 64,522 64,965 58,677 Current Assets 127, , , ,099 Net Property, Plant & Equipment (PP&E) 171, , , ,217 Total Assets 337, , , ,573 Current Liabilities 45,778 49,173 44,096 45,110 Total Debt 98, , , ,969 Total Liabilities 188, , , ,031 Shareholders Equity 149, , , ,542 Cash Flow Funds from Operations (FFO) 52,844 51,262 57,530 44,377 Cash Flow from Operations (CFO) 56,617 50,210 49,251 36,484 Capital Expenditures (CAPEX) (10,829) (12,845) (11,251) (18,693) Cash from Investing Activities (15,969) (12,967) (19,358) (26,921) Dividends (27,183) (29,225) (22,056) (19,699) Retained Cash Flow (RCF) 25, ,474 24,678 Share Repurchases Cash from Financing Activities (39,804) (30,153) (30,153) (16,111) LTM = last twelve months 5 DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

6 EXHIBIT 3 EBITDA Margin & EBITDA/Interest Expense (Adjusted) 35% EBITDA Margin% EBITDA/Interest Expense 20.0x 33% 16.0x 31% 12.0x 29% 8.0x 27% 4.0x 25% LTM as of Sept x As of 30 Sept 2013 EXHIBIT 4 Net Debt/EBITDA & RCF/Net Debt (Adjusted) Net Debt/EBITDA RCF/Net Debt% 1.6x 80% 1.4x 70% 1.2x 60% 1.0x 50% 0.8x 40% 0.6x 30% 0.4x 20% 0.2x 10% 0.0x LTM as of Sept % As of 30 Sept DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

7 Capital Structure and Debt Maturity Schedule Note: Some financials presented below have been adjusted for Moody s analytic purposes. To see how adjustments have been made, please see Moody s Financial Metrics, a fundamental financial data and analytics platform that offers insight into the drivers of Moody s Corporate ratings. EXHIBIT 5 Capital Structure Saudi Basic Industries Corporation (in SAR Million) 31-Dec Dec Dec-10 SHORT-TERM DEBT Short-Term Debt 874 1,333 1,121 Current Portion of Long-Term Debt 15,029 13,264 15,634 Total Short-Term Debt 15,904 14,597 16,754 LONG-TERM DEBT Senior Debt 94, , ,482 Capitalised Leases Gross Long-Term Debt 95, , ,381 Less Current Maturities (15,029) (13,264) (15,634) Net Long-Term Debt 80,307 88,750 94,747 Total Debt 96, , ,501 Total Adjusted Debt 112, , ,969 SHAREHOLDERS EQUITY Preferred Stock Common Stock & Paid-In Capital 129, , ,753 Retained Earnings 18,780 23,242 17,029 Total Equity 147, , ,782 Total Adjusted Equity 147, , ,542 Adjusted Book Capitalisation 312, , ,333 Adjusted Debt/Adjusted Book Capital (%) DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

8 The adjustments to SABIC s total adjusted debt in 2012 were related to operating lease and pension adjustments. EXHIBIT 6 Components of Debt 120, ,000 96,211 7,899 8, ,328 SAR Million 80,000 60,000 40,000 20,000 0 Unadj. Debt Pensions Lease Adj. Hybrid Securitisation Analyst Adj. Debt As of 31 Dec 2012 EXHIBIT 7 Upcoming Long-Term Debt Maturities SAR Million 18,000 16,000 14,000 12,000 10,000 8,000 15,029 12,009 14,049 16,518 11,883 6,000 4,000 2, As of 31 Dec DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

9 Company Management Company Management Current Title Previous Roles Mohamed H. Al-Mady Chief Executive Officer and Vice Chairman of the Board N/A As of 13 Apr 2013 Board of Directors Prince Saud bin Abdullah bin Thenayan Al-Saud Mohamed H. Al-Mady Dr. Abdulrahman Abdullah Al- Humaidi Bander Abdulaziz Al-Waili Abdullah Abdulrahman Al- Homoodi Abdulaziz Habdan Alhabdan Mohammed Abdullah Al- Kharashi Dr Khaled Nahas Abdullah M. Al-Issa Affiliation SABIC: Chairman; Royal Commission for Jubail and Yanbu and Power and Water Utility Company for Jubail and Yanbu (MARAFIQ): Chairman; Royal Family Council: Member; Prince Salman Social Center: Deputy Chairman SABIC: Vice Chairman and Chief Executive Officer; Gulf Petrochemicals & Chemicals Association (GPCA): Chairman; International Business Council, World Economic Forum, Boao Forum for Asia, World Sustainability Council and International Advisory Council, King Abdullah University of Science & Technology (KAUST): Member; Saudi Arabian Fertilizer Company (SAFCO): Chairman and Managing Director; London Business School: Fellow SABIC: Director; Saudi Arabian Monetary Agency (SAMA): Vice Governor SABIC: Director SABIC: Director SABIC: Director; Saudi French Bank, STC: Board Member SABIC: Director SABIC: Director SABIC: Director; A.M. Al-Issa Consulting Engineers: President; Mohammed Alissa and Sons: Member As of 13 Apr 2013 Source: Company data Ownership Structure As of 30 September 2013, the KSA owned 70% of SABIC s total share capital, with the remaining 30% held by the private sector. Source: Company Report (Q3 report Sept 2013) 9 DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

10 Subsidiaries As of 30 September 2013, SABIC s wholly owned subsidiaries were as follows: EXHIBIT 8 Saudi Basic Industries Corporation Company Name Location % Held SABIC Industrial Investments Company (SIIC) and its subsidiaries Saudi Arabia 100 SABIC Luxembourg S.a.r.l. and its subsidiaries Luxembourg 100 Arabian Petrochemical Company and its subsidiary (Petrokemya) Saudi Arabia 100 Saudi Iron and Steel Company (HADEED) Saudi Arabia 100 SABIC Sukuk Company Saudi Arabia 100 SABIC Industrial Catalyst Company (SABCAT) Saudi Arabia 100 Note: The table does not include all subsidiaries of the company Source: Company Report (Q3 report Sept 2013) Sector/Industry Peer Group» BASF (SE)» Royal DSM NV» Solvay SA» Dow Chemical Company (The) Related Websites and Information Sources For additional information, please see the company s website: MOODY S has provided links or references to third party World Wide Websites or URLs ("Links or References") solely for your convenience in locating related information and services. The websites reached through these Links or References have not necessarily been reviewed by MOODY S, and are maintained by a third party over which MOODY S exercises no control. Accordingly, MOODY S expressly disclaims any responsibility or liability for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on any third party web site accessed via a Link or Reference. Moreover, a Link or Reference does not imply an endorsement of any third party, any website, or the products or services provided by any third party. Moody s Related Research Issuer Page on Moodys.com:» Saudi Basic Industries Corporation Credit Opinion:» Saudi Basic Industries Corporation To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available on the issuer s page. All research may not be available to all clients. 10 DECEMBER 11, 2013 COMPANY PROFILE: SAUDI BASIC INDUSTRIES CORPORATION

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