Samir Al-Abdrabbuh,

Executive Vice President, Agri Nutrient Business - SABIC

GPCA fertilizer convention - Muscat, Oman

September 25th, 2019

CREATING VALUE THROUGH INTEGRATION AND INNOVATIONIN THE AGRI NUTRIENT INDUSTRY

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FERTILIZER INDUSTRY PERFORMANCE

HOW ARE WE DOING ?

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Classification: Internal Use

Source: Corporate Performance Analytics by McKinsey

SHAREHOLDER RETURNS WERE LAGGING THE PEERS

Total Return to Shareholders (TRS) 2008 – 2018*

12.7%

16.3%

35.9%

Fertilizers

S&P 500

Chemicals

*Total Return to Shareholders (TRS) combines share price appreciation and dividends paid to show the total return to the shareholder expressed as an annualized percentage.

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Classification: Internal Use

Source: IFA Forecast June 2019, Sabic analysis

GROWTH WITH THE MARKET: MARKET GROWTH BELOW GDP AND OTHER INDUSTRIES

Fertilizer Demand Growth 2018 – 2023 (in MMT Nutrients)

Nitrogen: 1.5 % CAGR

5 y Growth Projections of Agri-Industrial Inputs (Value)

145 156

4750

4346

2018 2023

Nitrogen Phosphate (P2O5) Potasch (K2O)

Total: 1.4 % CAGR

Phosphate: 1.2 % CAGR

Potash: 1.54% CAGR

235 252

2.9%

3.7%

2.4%

GDP

Ag Chem

Fertilizers

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Classification: Internal Use

CONSOLIDATION: P AND K HIGHLY CONSOLIDATED, SOME ROOM IN NITROGEN

Consolidation(Mega Merger/M&A last 10 years)

Market share of top 10 Fertilizer producer (2007 – 2018)

Top 10:24%

Top 10:45%

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2

4

6

8

10

12

14

16

18

20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

In b

n$

Market Share:Top 5 suppliers by Nutrient

14%

52%

75%

Nitrogen

Phosphate(DAP equi.)

Potash (KCl)

Top 5 Others

Source: Sabic analysis

*Excluding Chinese Market

25%*

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GROW BY

INTEGRATION ?

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Classification: Internal Use

GROWTH BY INTEGRATION: ADDED VALUE FROM DOWNSTREAM INTEGRATION- DISTRIBUTOR ACQUISITIONS AS GROWTH ENABLER

Integration (Downstream integration last 5 y)

DistributionFertilizer production

• Ben Trei (USA)• Fertilizantes (Br)• Trammo Inc. (USA)

• Louis Dreyfus (Aust)• Ruralco (Aust)

• Greenbelt (Africa)• Tata (India)• Cubatao (Br.)

• Heringer (Br)

• FertinAgro (Spain)

• Grow How (UK)

• Secure product outlet

• Manage Seasonality

• Better understand customer needs

• Additional profit pool

Wholesales Retail Farmer

• Meridian (East Africa)

Source: Sabic analysis

Rationale

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GROW BY

INNOVATION ?

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Classification: Internal Use

GROWTH BY INNOVATION HAS TO BE DRIVEN BY SUSTAINABILITY AND DIFFERENTIATION TO CREATE CUSTOMER VALUE

Source: Sabic analysis

Innovation

Sustainability

Differentiation

Create Value for Farmers

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Classification: Internal Use

INCREASE SUSTAINABILITY AND PLANT UPTAKE WITH ENHANCED EFFICIENCY FERTILIZERS

Source: Sabic analysis, FAO, Yara 2018 Handbook

Volatilization and Leaching Plant Nitrogen Uptake

Up to 50% Nitrogen losses

Urea responsible for approx. 8% of agricultural related GHG

Volatilization 10-20%

Leaching10-15%

No uptake10-15%

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Classification: Internal Use

ENHANCED EFFICIENCY UREA COULD REPRESENT ALMOST 50% OF THE GLOBAL UREA MARKET BY 2028

Urea market demand by type 2018 to 2028 (in MMT)

Source: Nexant , SABIC, RAMS&Co, IFA

Slow and Control Release

CAGR 2018-2028

10.8

4

30

100.2

145

Treated ROW

Treated China

NeemCoated India

Standard

Total UreaDemand

2018 in MMT

1.3%

31

8

33

93

165

2028 in MMT

-0.8%

7.4%30% 44%

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Classification: Internal Use

DIFFERENTIATION: PRECISION FARMING AND DIGITALIZATION DRIVE SOIL AND CROP SPECIFIC COMPOUNDED FERTILIZERS

Source: SABIC analysis, https://earthobservatory.nasa.gov/images/1139/precision-farming , https://www.dronezon.com/learn-about-drones-

quadcopters/multispectral-sensor-drones-in-farming-yield-big-benefits/

Benefit of Precision Farming/ Digitalization for Farmers/Suppliers

Nitrogen Oversupply and Benefit to Farmers by Imaging (example)

Prior Imaging

With Imaging

Nutrients costs/ hectare(in US$)

212 187

New profit pool / hectare ( in US$)

25

Soil- and crop specific fertilizer compounds

- 30% N

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Classification: Internal Use

INNOVATE TO GROW, OR INNOVATE TO DISRUPT ? DISRUPTIVE INNOVATION : CHALLENGES OR OPPORTUNITIES OR BOTH ?

Source: SABIC analysis

Nitrogen-fixing microbes – potential for true industry transformation

-8%

-88%

non GM crops CFC chemcials

Urea Substitution Scenarios 2018-

2028 (% reduction of total urea

demand)

Comparable incidencesGM: Gen-modified crops CFC: Chlorofluorocarbons – root cause for ozone hole

?

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Classification: Internal Use

THE MORE WE INTEGRATE & THE MORE WE INNOVATE, THE MORE VALUE WE CREATE

Source: SABIC analysis

Fertilizers Company’s Sales in Differentiated Products by Own Distribution (in % of total sales)

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20%

40%

60%

80%

100%

0% 10% 20% 30% 40% 50% 60%

% o

f s

ale

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Share of differentiated products (incl. NPKs) (% of Total sales) Sales in diff. products (in kmt)

THANK YOU