SABIC avoids $4bn in future losses with decision to divest from assets outside of Saudi Arabia

Saudi Basic Industries Corporation (SABIC) has said that its decision to divest from numerous assets outside Saudi Arabia has helped stem the potential loss of $4bn in the future, with additional savings of $5bn from shutdown and closure-linked costs, according to Maal.

According to SABIC’s executive vice president of corporate finance Salah bin Mohammed Al-Hareky – who was interviewed by Maal – SABIC’s move represents a significant change in the management of its business portfolio.

“[This] move was aimed at halting prolonged financial drain, improving capital allocation efficiency, and redirecting investments toward businesses with stronger profitability and more sustainable long-term prospects,” the company noted, adding that the losses had been “driven by structural shifts in global petrochemical markets, including substantial excess production capacity, intensifying competition from China, and environmental regulations that have increased costs, particularly in Europe”.

Al-Harkey continued to highlight that current transactions would also allow the company to prevent losses of around $3.4bn and $3.7bn from 2022 to 2025.

According to SABIC, the global petrochemicals sector continues to face significant pressure due to persistent oversupply and slow demand growth, with Europe in particular having seen a significant drop in profit margins due to weak demand. Continued unpredictability in the prices of feedstock as well as increasing energy costs and more stringent environmental regulations targeting climate emissions have only increased the pressures faced by the industry, Al-Hareky underscored.

Due to this, SABIC’s divestment will allow the company to improve its cash flow and capital efficiency, while also avoiding the costs of closing assets in future. The SABIC official concluded that “[These] steps form part of a broader portfolio optimisation programme at Saudi Basic Industries Corporation aimed at maximising long-term shareholder value, including maintaining stable cash dividends and supporting their growth over time.