SABIC: Financial Analysis and Key Indicators in Saudi Market

The Saudi Basic Industries Corporation (SABIC) was established in 1976 by royal decree aimed at launching an unprecedented industrial renaissance in the Kingdom of Saudi Arabia. At that time, the Kingdom primarily relied on crude oil exports, and there was a strategic realization of the need to leverage hydrocarbon wealth to produce value-added industrial materials. Thus, the idea of creating SABIC emerged to develop the petrochemical and chemical sector locally and position the Kingdom as a key player on the global stage in this field. SABIC's industrial base was built in the industrial cities of Jubail and Yanbu, where a network of advanced factories benefited from their proximity to natural gas sources and raw materials. Over four decades, SABIC has expanded to become one of the largest chemical companies in the world, now comprising over 50 subsidiaries and branches across Asia, Europe, and America. SABIC's impact has not been solely economic; it has contributed to human capital development by employing thousands of Saudis and establishing training and research programs, enhancing the Kingdom's position in industrial innovation. It has also contributed to building integrated industrial cities and providing direct and indirect job opportunities, becoming a fundamental pillar in the strategy to diversify the Saudi economy. Much of SABIC's success is attributed to its close partnership with the Saudi government, which has remained the largest supporter of its projects, whether through capital provision or incentive policies. Through its significant contribution to GDP, its role in technology transfer, and localizing industries, SABIC has become a symbol of economic transformation in the Kingdom and a source of pride for modern Saudi industry.

SABIC's ownership structure is characterized by a unique connection to the Saudi state, with the majority of its shares owned by Saudi Aramco, the global energy giant, which controls 70% of SABIC's capital. This strategic link came after Aramco acquired the government stake in SABIC in a massive deal announced in 2019, making Aramco one of the largest shareholders in the chemical industry globally. The remaining 30% of shares are distributed among individual investors and Saudi and international financial institutions, giving the company a mixed character that combines government ownership with private investment expertise. This partnership enhances SABIC's ability to implement its expansion plans and benefit from resource integration with Aramco, especially in joint refining and petrochemical projects (such as the Sadara project in Jubail). Additionally, its presence in Aramco's portfolio provides financial stability and greater flexibility in facing economic challenges. On the other hand, this structure reflects on the company's policies, as SABIC tends to follow strategic directions aligned with the priorities of the Saudi state and Vision 2030, whether in sustainability, external expansion, or supporting national industries. The close cooperation between SABIC and Aramco facilitates the exchange of technical expertise, supply chain integration, and strengthens negotiation power with international partners and suppliers. Conversely, the presence of private sector shareholders adds a competitive and oversight dimension to the company's performance, enhancing governance transparency and financial decision-making. Overall, this ownership structure reflects a unique model of public-private partnership and provides SABIC with strategic support in facing global challenges.

SABIC's financial results during 2024 and 2025 have shown clear fluctuations, influenced by a range of local and global economic factors. According to official reports, the company recorded an unexpected net loss of SAR 4.07 billion in the second quarter of 2025, compared to analysts' expectations of a profit of about SAR 504 million. This loss marks the third consecutive quarter of losses, underscoring the pressure facing the petrochemical sector internationally. The main reasons for these results stem from weak global demand for chemical products, rising operational costs, and strategic decisions such as closing the petrochemical cracking unit in the UK, which resulted in massive write-off provisions amounting to SAR 3.78 billion. The company also incurred additional losses due to a decline in the value of its investments in the Swiss company Clariant, leading to further write-offs in its asset list. These figures directly reflected on the company's profitability and impacted investor sentiment and stock performance in the Tadawul market. Nevertheless, SABIC proposed a dividend distribution of SAR 1.5 per share for the first half of 2025, in an attempt to maintain shareholder confidence. Recent fluctuations are part of an economic cycle affecting the petrochemical industry globally, where profits are significantly influenced by changes in demand and prices. In such environments, focusing on cost management and enhancing operational efficiency becomes crucial in the strategies of major companies like SABIC.

SABIC's stock experienced sharp fluctuations from the end of 2024 to mid-2025 due to declining financial performance and changes in global markets. The stock price dropped by about 19% since the beginning of 2025, a notable decline that directly reflected after the announcement of second-quarter results, which included net losses exceeding analysts' expectations. For instance, the stock fell by 1.6% immediately after the loss announcement, illustrating the impact of financial results on daily stock movement. Such fluctuations are normal amid the unstable economic conditions facing the chemicals and petrochemicals industry, where prices are affected by demand fluctuations, raw material price changes, and geopolitical events. In terms of market value, SABIC remains among the largest companies listed on the Saudi market, with a market capitalization exceeding several tens of billions of dollars, granting it significant weight within the general market index (TASI) and the basic materials sector. This market position places SABIC in a sensitive position regarding any financial or strategic changes, as its performance often reflects on investor sentiment in the market as a whole. As for the price-to-earnings (P/E) ratio, it has become meaningless recently due to consecutive losses, as any ratio based on negative earnings is illogical or excessively high. Therefore, investors in such cases tend to focus on other indicators such as cash flow or expected future earnings when evaluating the stock. Overall, the importance of financial risk management and precise performance analysis emerges when tracking stocks of major companies like SABIC during periods of economic uncertainty.

SABIC's dividend policy is one of the fundamental pillars of its strategy in managing its relationship with shareholders and maintaining stock stability in the Saudi financial market. Over the years, the company has committed to distributing annual and semi-annual dividends at high rates of its net profits, often ranging between 70% and 80% during strong performance years. Even amid the financial difficulties faced by the company during 2024 and 2025, management insisted on proposing a dividend distribution of SAR 1.5 per share for the first half of 2025, despite recording consecutive losses. This approach reflects SABIC's desire to enhance investor confidence and its ongoing commitment to clear distribution policies, which grants the stock relative stability even during periods of volatility. Additionally, dividend distribution is an attractive element for investors seeking periodic returns and contributes to supporting the stock's market value in the long term. Practically, the value of distributions depends on business results and the approval of the board of directors and the general assembly, and is officially announced at the end of each half-year. During times when the company faces financial challenges, the distribution value may vary or be temporarily suspended depending on circumstances. Overall, SABIC's dividend policy stands out as a factor of trust and stability in the market, playing a pivotal role in maintaining the stock's attractiveness to both local and international investors.

SABIC is distinguished by its product diversity and its extension across the industrial value chain, granting it a strong competitive advantage in local and international markets. SABIC operates in several key sectors, starting from basic chemicals, through advanced plastics and polymers, to industrial metals and fertilizers. In the chemicals sector, the company produces basic materials such as ethylene, propylene, methanol, and ammonia, which are raw materials for a large number of manufacturing industries. In the plastics sector, SABIC is one of the largest producers of polyethylene and polypropylene, which are used in packaging, automotive, electronics, and medical products. The company also produces engineering polymers and advanced materials used in high-tech industries. In the metals sector, SABIC produces aluminum and iron alloys, supporting construction, transportation, and energy industries. In the fertilizers sector, the company offers nitrogenous and phosphatic products serving the agriculture sector regionally and internationally. SABIC also invests in advanced materials and clean technologies, such as bioplastics and recyclable materials, in response to the increasing demand for environmentally friendly products. This product diversity grants the company flexibility in facing market fluctuations and allows it to enter new markets and meet the needs of various sectors. It also enhances its ability to innovate and provide integrated industrial solutions that meet customer requirements worldwide.

The petrochemical sector is one of the pillars of the Saudi economy, due to its reliance on abundant low-cost raw materials and strong industrial infrastructure. SABIC leads this sector thanks to its massive production capacity and integrated supply chains. The company works alongside other Saudi companies such as Yanbu National Petrochemicals (Yansab), National Industrialization Company (Tasnee), and national oil companies as part of Aramco's joint projects (such as Sadara). This local competition drives SABIC to continuously innovate and improve operational efficiency to maintain its market share. Regionally and internationally, SABIC competes with giants such as Dow Chemical (USA), BASF (Germany), Sinopec (China), LyondellBasell (Netherlands/USA), and Braskem (Brazil). The company faces challenges from emerging Asian and Latin American companies, prompting it to update its technologies and expand its product range. The sector itself is affected by external factors such as fluctuations in oil and gas prices, changes in environmental policies, and developments in global demand, especially in Europe, America, and Asia. SABIC maintains a competitive advantage due to its production efficiency, geographical diversity, and continuous investment in research and development. It also benefits from its integration with Aramco in securing supplies and exchanging industrial expertise. Overall, SABIC remains a key player in the petrochemical sector, and its dynamics and competitive position are important indicators of sector trends in the Kingdom and the region.

In recent years, SABIC has faced increasing challenges reflecting profound transformations in the global petrochemical sector. The first of these challenges is the slowdown in global demand for chemical products, particularly in major markets such as Europe and the United States, due to changes in supply chains, rising inflation, and slowing economic growth. Additionally, fluctuations in raw material prices pose challenges; while low gas prices provide a relative advantage, any sudden changes could impact profit margins. Increased regional and global competition, especially with the entry of new companies in Asia and Latin America, exerts pressure on prices and market shares. Among the internal challenges, the need for restructuring has emerged, as seen in the decision to close the cracking unit in the UK, which resulted in substantial write-off provisions amounting to SAR 3.78 billion. These actions reflect the necessity to review investment strategies and focus on more profitable assets. Furthermore, challenges arise from international trade policies, such as new tariffs on chemical products in certain markets, which may limit the company's export capabilities. Finally, the importance of compliance with environmental standards and developing sustainable products is increasing, as the petrochemical industry faces mounting pressure to reduce carbon footprints and adopt environmentally friendly solutions. In this context, SABIC continues to invest in clean technologies and develop recyclable materials as part of its strategy to address these challenges.

SABIC places great importance on innovation and technological development as a core element of its strategy for sustainable growth and addressing changes in global markets. The company has advanced research and development centers in Saudi Arabia and abroad, investing significant annual amounts in developing new materials and technologies, particularly in advanced chemistry and engineering plastics. Among the company's key trends is investing in bioplastics and recyclable products in response to the growing global demand for sustainable solutions. It also works on developing production technologies to reduce emissions and improve energy efficiency, contributing to cost reduction and enhancing environmental performance. At the operational level, SABIC relies on factory automation and the use of artificial intelligence in quality control and industrial process management. It also participates in joint research projects with global universities and research centers to innovate new materials that meet the needs of the automotive, electronics, construction, and medical sectors. The company is keen to transfer these technologies to local factories, enhancing technology localization and increasing the Kingdom's competitiveness in advanced industries. Innovation extends beyond products to developing smart logistics and supply chain solutions that enhance distribution efficiency and responsiveness to markets. Overall, investment in research and development is a fundamental pillar of SABIC's strategy to keep pace with industrial transformations and achieve leadership in the global basic materials market.

Saudi Vision 2030 is a central pivot in shaping SABIC's strategies for expansion and industrial development. The national vision aims to diversify the Saudi economy and reduce reliance on crude oil, which aligns perfectly with SABIC's expansion plans in non-oil industrial sectors. The company focuses on supporting local manufacturing by investing in advanced petrochemical projects, developing value-added products, and contributing to building integrated supply chains within the Kingdom. It also participates in government initiatives to enhance the manufacturing sector and localize technical knowledge, reflected in training and qualifying national cadres. On the other hand, SABIC supports the Kingdom's plans to develop complementary industries and export markets, whether through local partnerships or external expansions. The company is also committed to achieving the vision's goals in environmental sustainability by adopting clean production technologies and developing environmentally friendly products, such as bioplastics and recyclable materials. It also contributes to infrastructure development projects, such as the Jubail and Yanbu cities, and supports innovation in industrial research. This approach requires SABIC to maintain strategic flexibility and adopt new operational models that enable it to keep pace with economic transformations. Ultimately, SABIC's strategies reflect a deep commitment to the objectives of Vision 2030 and consider them a fundamental pillar in building a diverse and sustainable Saudi economy.

In mid-2025, SABIC witnessed significant events that attracted the attention of investors and financial media. Among the most important developments was the announcement of second-quarter results, which included net losses of SAR 4.07 billion, considered a significant surprise far exceeding expectations. The company attributed these results to weak global demand and the closure of the petrochemical cracking unit in the UK, a strategic step to enhance spending efficiency and redirect resources toward more profitable assets. Concurrently, the company announced a proposed dividend distribution of SAR 1.5 per share for the first half of 2025, sending a clear message of its commitment to supporting shareholders despite challenges. Another notable development was the company's exploration of the possibility of an initial public offering for the National Industrial Gases Company, aimed at enhancing liquidity and diversifying income sources. The company's shares also experienced a slight increase of 0.2% in July 2025 following the announcement of some new initiatives, although the improvement remained limited amid ongoing financial pressures. Internationally, SABIC closely monitors developments in trade policies and tariffs on petrochemical products, especially the US trends to impose additional tariffs, which could affect its exports. The company continues to invest in research and development projects, focusing on bioplastics and advanced technologies. These developments confirm the company's dynamism and its ability to adapt to changes, highlighting the importance of effective management and strategic planning in facing challenges.

Sustainability occupies a central position in SABIC's future strategy, as the company recognizes that commitment to environmental standards has become a prerequisite for success in the global petrochemical sector. SABIC focuses on developing environmentally friendly products, such as bioplastics and recyclable materials, and invests in production technologies that reduce carbon emissions and improve energy efficiency. It also participates in global initiatives to promote the circular economy, where it recycles industrial waste and integrates it into the production chain. At the operational level, the company applies strict standards for managing industrial waste and reducing water consumption, and commits to transparent reporting on environmental performance. It collaborates with government entities and international organizations to develop industrial policies that support sustainability. The company also emphasizes raising awareness among local and global communities about the importance of green manufacturing through educational programs and social initiatives. In light of increasing environmental regulations in Europe, America, and Asia, SABIC continuously seeks to develop innovative solutions that meet customer requirements and align with sustainable development goals. Overall, environmental commitment is a pivotal part of SABIC's identity, enhancing its competitive position and attractiveness to investors and financial institutions globally.

Despite the significant challenges facing the global petrochemical sector, SABIC's prospects appear promising due to its strategic flexibility and ability to adapt to economic and technological changes. Among the future opportunities for the company is the potential to benefit from the recovery in global demand for chemical materials, especially with improving economic conditions in emerging markets and the increasing need for advanced materials in sectors such as electronics, automotive, and renewable energy. Its partnerships with Aramco and other global companies provide opportunities to enhance integration and achieve economies of scale. On the other hand, investing in green technologies and sustainable products allows entry into new markets and increases the company's attractiveness to customers prioritizing sustainability. Conversely, risks remain, primarily ongoing price fluctuations, fierce competition, and changes in global trade and environmental policies. The company may also face additional pressures from the need to invest in new assets or restructure some unprofitable activities. In this context, SABIC's success depends on its ability to innovate, control costs, and respond quickly to market changes. Ultimately, SABIC's future represents a model for the ambitious Saudi industry, relying on a delicate balance between risk and opportunity, while continuing to focus on achieving sustainable value for shareholders and the national economy.