Sabic Case With Full Details

Saudi Basic Industries Corp.

Primary Credit Analyst:

Oliver Kroemker, Frankfurt (49) 69-33-999-160; [email protected]

Secondary Contact:

Karl Nietvelt, Paris (33) 1-4420-6751; [email protected]

Table Of Contents

Major Rating Factors

Rationale

Outlook

Business Description

Government Support And GRE Methodology Impact

Business Risk Profile: Excellent Profitability, Thanks To Low-Cost

Feedstock And Modern Plants

Financial Risk Profile: Strong Metrics And Projected Strong Free Cash Flow

Financial Statistics/Adjustments

Related Criteria And Research

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 16, 2012 1

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Major Rating Factors

Strengths:

• Extremely low cost positions predominantly thanks to competitively priced

feedstock from Saudi Aramco.

• Very high and resilient profitability of Saudi petrochemical and fertilizer

plants.

• Large-scale plants following completion of a major investment phase.

• Sovereign ownership, which helps with raw material supplies, funding, and

infrastructure.

• Robust credit metrics and free operating cash flow, and moderate debt.

Corporate Credit Rating

A+/Stable/A-1

Weaknesses:

• Limited geographic diversity with the lion's share of profits stemming from Saudi Arabian production.

• Profit volatility and cyclicality related to the petrochemicals industry.

• High dividends and group complexity from minority shareholders.

Rationale

The ratings on Saudi Arabia-based petrochemicals producer Saudi Basic Industries Corp. (SABIC) primarily reflect

Standard & Poor's Ratings Services' assessment of its stand alone credit profile (SACP) as 'a' and one notch of uplift for

potential extraordinary state support. We consider SABIC, 70% owned by the Kingdom of Saudi Arabia

(AA-/Stable/A-1+), a government-related entity (GRE). We qualify SABIC's link with the government as "very strong"

and its role for the country as "important" under our criteria, resulting in one notch uplift.

SABIC is the world's No. 2 producer of ethylene and the No. 3 producer of polyethylene. Its all-in production—which

comprises mainly petrochemicals, intermediates, and polymers, and secondarily fertilizers and steel—reached 69

million tons (mmt) in 2011, up from 58.5 mmt in 2009. SABIC's 12 domestic crackers and chemical complexes are

located at the Jubail and Yanbu industrial sites. SABIC's sizable international activities, SABIC Europe and SABIC IP

(both unrated), are important revenue contributors, but represent only a fraction of the group's profits.

Our view of SABIC's "strong" business risk profile is supported primarily by the excellent profitability of the company's

Saudi activities, which enjoy access to competitively priced gas-based feedstock at prices that are well below world

market levels. This access is made possible through the company's long-term gas supply contracts with national oil

company Saudi Aramco. However, SABIC's limited geographic diversity is a key rating constraint. Its Saudi Arabian

production assets continue to account for the lion's share of profits, even if the majority of domestic production is

exported. Other relative weaknesses are the cyclicality of SABIC's petrochemicals and steel-production business units.

SABIC's "modest" financial risk profile is underpinned by the company's modest debt in comparison to its impressive

free operating cash flow (FOCF) before dividends. FOCF was boosted notably in 2011 and 2012, now that SABIC's


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huge multiyear investment capital spending has abated. In addition, we view the company's liquidity management as

prudent. It has sizable cash balances, with which management intends to cover several years of debt maturities, and

which it keeps as flexibility in the event of small to midsize acquisition opportunities. Nevertheless, relative weaknesses

include cash flow volatility due to oil and chemical prices, generous dividends, and the group's complexity resulting

from large minorities at several project subsidiaries.

S&P base-case operating scenario

We expect SABIC's EBITDA in 2012 to be somewhat below the record high 2011 EBITDA of Saudi Arabian riyal (SAR)

60.6 billion ($16.2 billion), which was fully in line with our expectations.

For 2012, our base-case assumption is an average $109 per barrel (bbl) oil price, compared with $111 per bbl average

in 2011. We also assume lower chemical and polymer margins than in 2011, in view of less supportive global

economic conditions. At the same time, SABIC's EBITDA should benefit from the full-year contribution of its

multi-billion Saudi Kayan project. EBITDA in the first nine months of 2012, for example, was a solid SAR43.8 billion

and we estimate for the full year that EBITDA will be somewhat below the 2011 peak.

For 2013, bearing in mind the more difficult economic conditions, we work with oil prices averaging $90 per bbl and

midcycle margins for chemicals and steel. We estimate that SABIC's EBITDA will stay comfortably above the 2010

level.

S&P base-case cash flow and capital-structure scenario

SABIC's adjusted funds from operations (FFO)-to-debt ratios should remain very comfortable over 2012-2013 within

the range of 70%-100% in our base-case scenario, even when factoring in the possibility that part of the company's

huge cash balances could be used for a midsize acquisition. At end-September 2012, adjusted FFO to debt stood at

90%. We also view SABIC's financial flexibility as ample, including strong FOCF In the 12 months to September 2012,

FFO reached almost SAR49 billion, compared with strongly reduced capital spending of SAR11.1 billion, SAR14.9

billion in parent dividends, and SAR9.8 billion in dividends to minorities. Over the medium term, we expect some

pickup in capital spending to about SAR15 billion from the current trough, as well as potential for a modest acquisition.

SABIC's gross financial debt declined to SAR96.9 billion ($25.8 billion) as at Sept. 30, 2012, with reported cash and

short-term deposits at a very high SAR62.7 billion ($16.7 billion). Management has stated that it aims to keep a sizable

liquidity cushion, providing flexibility and coverage for price volatility, and fairly significant medium-term debt

maturities of about SAR14 billion per year. We nevertheless expect that SABIC will use some cash to further reduce

gross debt and possibly make some midsize acquisitions. Our adjusted net debt figure stood at SAR54.5 billion at

end-September 2012, which is about SAR20 billion more than reported net debt of SAR34.2 billion. This is because we

adjust for pensions (SAR8.6 billion) and operating leases (SAR5.2 billion), while we treat about SAR5 billion of cash as

tied to operations and therefore do not net it from debt. Most of SABIC's net debt is located at international

subsidiaries (SABIC IP and SABIC Capital), and at joint-venture projects such as Saudi Kayan, Yansab, and Sharq,

which have not yet deleveraged.

Liquidity

We view SABIC's liquidity as "strong" under our criteria and calculate that liquidity sources should exceed liquidity

needs by more than 1.5x over the next 12 months, and by more than 1x over the next 24 months.


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We estimate that SABIC's main liquidity sources for the next 12 months are:

• Very high surplus cash holdings and short-term investments estimated at over SAR62.7 billion at the end of

September 2012. This excludes SAR5 billion, which we treat as tied to operations. Management has confirmed that

the majority of this is located at, and available to, the Saudi parent company;

• Undrawn committed medium-term credit lines at end-September 2012 of SAR3.5 billion ($0.9 billion). These are

held at SABIC Capital and mature in 2016; and

• FFO that we anticipate will stay in the range of SAR45 billion-SAR50 billion

This compares with the following potential liquidity needs over the next 12 months:

• About SAR12.1 billion in short-term debt as at end September 2012. In addition, debt maturities will remain sizable

in 2013 and 2014, at about SAR14 billion per year;

• Capital expenditures that we estimate will rise again to SAR15 billion annually or just below; and

• High dividends, including payments to minorities. These amounted to SAR22 billion in 2011, but we view such

payments as partly discretionary.

Outlook

The stable outlook factors in the substantial financial headroom in SABIC's credit metrics at end-September 2012 and

our expectation of continued large FOCF, even though petrochemical industry conditions have deteriorated in recent

months, and that oil prices will remain at elevated levels. We view a ratio of adjusted FFO to debt of about 55% (90%

at year-end-September 2012) as commensurate with the current ratings, in a more conservative midcycle pricing

environment (including oil prices of $80 a barrel). We also believe that the ratings incorporate headroom for a sizable

acquisition funded from the group's cash balances.

Downward pressure is unlikely, in our view, given the group's increased financial strength. However, a higher SACP is

currently unlikely, given the group's limited geographic diversity, with the lion's share of profits stemming from Saudi

Arabian production assets. In addition, even if we were to raise the SACP by one notch, the overall rating would

remain unchanged because we would likely remove the one notch of uplift we apply to reflect extraordinary state

support.

Business Description

SABIC is the largest chemicals company in the Middle East. It was founded in 1976 to use the natural gas created as a

by-product of Saudi Arabia's crude oil production. The company is listed on Saudi Arabia's stock exchange, but

remains majority-owned by the Kingdom of Saudi Arabia, which holds a 70% stake. SABIC's total production was 69

mmt in 2011, which ranks it among the top five global producers of ethylene, polyethylene (PE), polypropylene (PP),

ethylene glycol, methanol, and methyl tertiary butyl ether (MTBE). Taking into account the ongoing start-up of its

Saudi Kayan project, the company now operates 15 crackers, of which 12 are located in Saudi Arabia and three in

Europe. SABIC also makes use of its access to low-priced domestic gas by diversifying into nitrogen-based fertilizer

production--such as ammonia and urea--as well as steel operations. Most activities involve joint ventures. However,

SABIC exercises control and consequently fully consolidates the entities, including the minorities.


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Despite SABIC's wide international diversification in recent years, the lion's share of the company's EBITDA--but not

of sales--stems from its Saudi activities, which are distinctly more profitable. Bearing in mind that the majority of its

Saudi production is also exported, SABIC's sales profile is geographically well balanced, with the Middle East and

North Africa representing 32%, Europe 22%, Asia 38%, and the U.S. and others 8%.

In the past decade, SABIC has made three major international acquisitions: It acquired the Dutch and German

petrochemical sites of Koninklijke DSM N.V. in 2002, and the U.K. petrochemical operations of Huntsman in 2006.

SABIC's largest acquisition was the specialty plastics arm of GE in 2007.

Segment analysis

SABIC is currently organized into six strategic business units (see chart 1).

Chart 1

Chemicals: The output of SABIC's chemicals segment totaled 44.0 mmt in 2011. More than half of the segment is

engaged in basic chemicals production, with the remainder coming from intermediates.

• Basic chemicals comprise the ethylene production from the company's Saudi ethane-based crackers (11.7 mmt

nameplate capacity), all of which is used for SABIC's own products, mainly PE. Other key basic chemicals are

oxygenates, such as MTBE and methanol. SABIC's European crackers--2.1 mmt capacity--run on naphtha

feedstock, and generate, in addition to ethylene, a significant share of propylene, benzene, and toluene.

• Intermediate chemical output in Saudi Arabia consists of large volumes of ethylene glycol, as well as industrial

gases--mainly nitrogen and oxygen--which are principally used in internal production. SABIC also produces smaller

volumes of ethylene dichloride and caustic soda.


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Polymers: The polymers unit produced 11.3 mmt in 2011. The unit is the company's largest business by revenues. In

2012, we expect SABIC to be the global No. 3 producer of PE and PP. Saudi PE and PP production account for about

three-quarters of this segment's output, while the remainder comes from the European polymer operations.

Performance Chemicals: The segment was created in 2010 and reached production output of 0.5 million tons in 2011,

including acetic acid, ethylhexanol, and alpha olefins. The output of this segment should rise substantially in

2012-2013 with the start-up of Saudi Kayan, which will contribute specialty products such as polycarbonates and

ethanolamines. The company expects performance chemicals to account for about 10% of group revenues by 2020.

Innovative Plastics: This is the international business of SABIC IP. Production output represents only 1.1 mmt, a major

part of which are polycarbonates. However, these limited sales volumes disguise their substantially higher contribution

to sales, as prices are a multiple of basic or intermediate commodity chemical prices.

Fertilizers: In 2011, SABIC produced 6.7 mmt of nitrogen fertilizers in Saudi Arabia, mainly urea and ammonia. It

exports more than 80% of its fertilizer production and fully controls the nitrogen fertilizer markets in Saudi Arabia.

SABIC also has a consolidated 30% equity stake in a joint venture with Ma'aden, a Saudi Arabian mining company, to

exploit a large phosphate deposit and build a diammonium phosphate plant with targeted annual capacity of 3 million

tons starting in 2012-2013.

Metals: SABIC is the largest steel producer in the Middle East, through its 100%-owned subsidiary, Hadeed. The

company produced about 5.4 mmt of long and flat steel in 2011. SABIC diversified into steel to leverage its access to

gas-fired electricity in Saudi Arabia at lower than international market prices, and imports the necessary iron ore. The

subsidiary has plans to greatly expand its production capacity with two greenfield projects. Besides steel production,

SABIC has two equity-consolidated investments in major aluminum producers in Bahrain.

Government Support And GRE Methodology Impact

We view SABIC as a GRE and assume the likelihood of extraordinary support in the event of stress to be "high"

according to our criteria. We view the company's link with the government as "very strong" and its national role as

"important". In accordance with our GRE criteria, we have factored in one notch of uplift from the SACP. In our

opinion, SABIC plays an important role in Saudi Arabia's strategy to diversify its economy toward the non-oil industry.

In addition, the company is a significant employer in Saudi Arabia. About 90% of the local workforce are Saudi

nationals.

SABIC is 70% owned by the Public Investment Fund (PIF), a Saudi public investment fund. The board of directors

comprises seven members, five of whom represent the Saudi government, including the chairman and vice chairman.

We understand that PIF intends to keep SABIC as one of its core holdings and as a key strategic investment. SABIC

also benefits from very high ongoing support in that the government sets the price of ethane, a by-product of oil

production by 100% state-owned Saudi Aramco and a key feedstock in the production of petrochemicals. This has a

strong positive influence on SABIC's profitability, and is intended to further diversify Saudi Arabia's industrial

operations and add value to its natural hydrocarbon resources. The state's current ethane price of 75 U.S. cents per

million British thermal units is significantly below international market prices. In addition, the government supports


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and participates in the funding of new projects for SABIC, through government-related agencies such as PIF.

Business Risk Profile: Excellent Profitability, Thanks To Low-Cost FeedstockAnd Modern Plants

We believe that the key factors supporting SABIC's "strong" business risk profile are the company's:

• Excellent cost position, which explains SABIC's much higher score for business risk than for European

petrochemical producers. SABIC's low cost position stems in the first place from its access to low-priced gas as well

as propane/butane under long-term contracts with Saudi Aramco. We estimate that the average feedstock costs of

its Saudi ethane/propane-based crackers are about $600-$800 per ton below those of high-cost naphtha-based

crackers in Europe, assuming oil prices of $80-$100 per bbl. However, naphtha-based crackers have a different

output mix with a higher share of propylene, butadiene, and benzene/toluene, while ethane-based crackers produce

principally ethylene.

• Strong and resilient profitability. In our base case, we see SABIC's consolidated EBITDA margins at 31%-34% over

the next three years, which assumes a $90 per bbl oil price but factors in the cyclicality of chemical and polymer

margins. Moreover, the EBITDA margins of the company's Saudi activities are significantly higher than elsewhere in

the group. Perceived structurally higher oil prices support higher petrochemical prices, with European or Asian

naphtha-based crackers as the marginal price setters, augmenting the competitive difference between product prices

and SABIC's domestic fixed-price ethane/propane feedstock costs. During the financial downturn of 2009, SABIC's

consolidated EBITDA margins still amounted to 28.7%, well above those of its international peers. In addition,

SABIC benefits from a highly favorable tax regime in Saudi Arabia, which facilitates free cash flow generation in

strong contrast to that of oil and gas producers elsewhere.

• Large-scale domestic petrochemical operations strategically located in coastal locations near Jubail and Yanbu,

facilitating exports to fast-growing Asian markets as well as to Europe and North America.

• Sustained large volume growth forecasts for 2010-2014. SABIC targets production exceeding 70 mmt installed

capacity by 2012 and 75 mmt in 2014, up from 58.5 mmt in 2009. Significant progress has been made in this

respect, with 2011 volumes rising to 69 mmt, reflecting a ramp up at the Sharq and Yansab plants and the launch of

commercial operations at the world-class Saudi Kayan cracker complex on Oct. 1, 2011.

Slightly offsetting these strengths, in our opinion, are the following risks:

• High profit volatility. Although SABIC's EBITDA margins have proven to be resilient over the cycle, fluctuations in

absolute EBITDA have been considerable. EBITDA peaked at over SAR60 billion in the 12 months to Sept. 30, 2011

from a low of SAR30 billion in 2009, before declining again to SAR 57 billion in the 12 months to Sept. 30, 2012.

• Near-term downward pressure on chemical and polymer margins as a result of a weakened economic environment.

We believe that volume risk itself is limited for SABIC because its low-cost plants in Saudi Arabia tend to run at full

capacity regardless of the cycle.

• Saudi Arabia-related country risk, including political and social stability. The petrochemical complexes in Jubail and

Yanbu generate the bulk of SABIC's profits, even if the majority of output is exported.

• Future rises in domestic gas prices. However, even a doubling of gas prices (from the currently low 75 U.S. cents

per British thermal unit would have a modest impact in our view, due to high margins on the product in the global

market.


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Financial Risk Profile: Strong Metrics And Projected Strong Free Cash Flow

In our opinion, the following key strengths underpin SABIC's "modest" financial profile:

• Fairly conservative financial policies of maximum 1.5x reported net debt to EBITDA and low debt-to-equity ratios.

Given the cyclicality of the sector and the volatility of SABIC's profits, we expect the company to maintain credit

metrics at lower levels during top-cycle conditions. With most of the company's investment program completed, we

expect this ratio to stay at or below 1.0x.

• Strong and rising free cash flows because capital spending intensity is set to drop to 8%-10% of sales over

2012-2014 from more than 20% over 2006-2009. At the same time, this should result in impressive free cash flow

after capital expenditure, even if high dividends tend to consume the majority. Nevertheless, we expect some

positive discretionary cash flow to result in gradual debt reductions in our base-case credit scenario over the next

few years.

• Prudent liquidity with management of high cash balances aimed at covering a few years of debt maturities and

providing flexibility in the event of a modest acquisition. Funding sources are equally diversified, including loans

from the state-owned PIF, domestic and international bank loans, international bonds and sukuk as well as a

significant amount of nonrecourse debt at part-owned project subsidiaries, such as Sharq, Yansab, and Saudi Kayan.

These strengths are moderated in our view by:

• A complex group structure with a significant share of minorities, with debt and cash balances spread over various

entities.

• A generous dividend policy that has contributed to negative discretionary cash flow in the past few years. Sustained

high dividend payouts to minorities (at close to 100% of profits), including during the 2009 crisis, imply significant

cash flow leakage and fixed charges The dividend policy allows SABIC to upstream most cash to its parent, though

such payments are more moderate and were curbed during the 2009 downturn.

Financial Statistics/Adjustments

SABIC reports according to Saudi Arabian generally accepted accounting standards, which are closely linked to

International Financial Reporting Standards. SABIC's accounts are relatively complex because the company fully

consolidates many joint-venture companies--even though they have a high share of minorities. We believe that the

consolidated accounts reflect the company's credit quality fairly well. That said, most mature projects tend to be

almost debt free, while generating significant free cash flow but also substantial leakage of dividends to minorities.

However, this is mitigated by the fact that a major part of SABIC's debt is also located at new projects such as Sharq,

Yansab, and Saudi Kayan, which also have a high share of minorities.


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Table 1

Reconciliation Of Saudi Basic Industries Corp. Reported Amounts With Standard & Poor's Adjusted Amounts(Mil. SAR)

--Fiscal year ended Dec. 31, 2011--

Saudi Basic Industries Corp. reported amounts

Debt

Shareholders'

equity Revenues EBITDA

Operating

income

Interest

expense

Cash flow from

operations

Reported 102,504.9 138,022.4 189,898.3 60,653.7 48,838.4 2,992.6 42,144.5

Standard & Poor's adjustments

Operating leases 5,151.6 -- -- 256.6 256.6 256.6 1,032.3

Postretirement benefit

obligations

8,554.8 0.0 -- -- -- 376.4 (1,026.3)

Surplus cash and near cash

investments

(60,211.9) -- -- -- -- -- --

Capitalized interest -- -- -- -- -- 600.0 (600.0)

Reclassification of

nonoperating income

(expenses)

-- -- -- -- 1,345.7 -- --

Reclassification of

working-capital cash flow

changes

-- -- -- -- -- -- --

Minority interests -- 51,183.2 -- -- -- -- --

Capital lease not included

in debt

1,596.9 -- -- -- -- -- --

Working capital - Other -- -- -- -- -- -- 6,901.5

Total adjustments (44,908.6) 51,183.2 0.0 256.6 1,602.3 1,233.0 6,307.5

Standard & Poor's adjusted amounts

Debt Equity Revenues EBITDA EBIT

Interest

expense

Cash flow from

operations

Adjusted 57,596.3 189,205.6 189,898.3 60,910.3 50,440.6 4,225.7 48,452.0

We adjust SABIC's 2011 debt by adding:

• Operating leases with a net present value of SAR5.2 billion.

• On-balance-sheet capital leases and accrued interest of SAR1.6 billion, which are not captured in reported debt

figures.

• On-balance-sheet postretirement liabilities of SAR8.6 billion.

We deduct from SABIC's 2011 debt SAR60.2 billion in surplus cash. We estimate this figure by excluding SAR5 billion

considered as cash tied to operations. We note that a material part of cash resides at the level of the operating

companies with minorities, but so does the debt.

Table 2

Saudi Basic Industries Corp. -- Peer Comparison

Saudi Basic Industries Corp. BASF SE The Dow Chemical Co.

Rating as of Nov. 5, 2012 A+/Stable/A-1 A+/Stable/A-1 BBB/Stable/A-2


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Table 2

Saudi Basic Industries Corp. -- Peer Comparison (cont.)

--Fiscal year ended Dec. 31, 2011--

(Mil. Mix curr.) SAR € $

Revenues 189,898.3 73,497.0 59,985.0

EBITDA 60,910.3 11,649.6 7,797.8

Net income from cont. oper. 29,241.8 6,188.0 2,742.0

Funds from operations (FFO) 57,162.5 8,317.6 5,563.9

Capital expenditures 11,557.9 3,450.1 3,116.5

Free operating cash flow 36,894.1 3,961.6 1,485.4

Discretionary cash flow 14,838.1 1,483.6 397.4

Cash and short-term investments 5,000.0 400.0 5,446.0

Debt 57,596.3 15,762.5 32,752.9

Equity 189,205.6 25,402.0 22,156.3

Adjusted ratios

EBITDA margin (%) 32.1 15.9 13.0

EBITDA interest coverage (x) 14.4 13.1 4.5

EBIT interest coverage (x) 11.9 10.5 3.4

Return on capital (%) 20.8 21.3 10.4

FFO/debt (%) 99.2 52.8 17.0

Free operating cash flow/debt (%) 64.1 25.1 4.5

Debt/EBITDA (x) 0.9 1.4 4.2

Total debt/debt plus equity (%) 23.3 38.3 59.6

Table 3

Saudi Basic Industries Corp. -- Financial Summary

--Fiscal year ended Dec. 31--

2011 2010 2009 2008 2007

Rating history A+/Stable/A-1 A+/Stable/A-1 A+/Stable/A-1 A+/Stable/A-1 A+/Stable/A-1

(Mil. SAR)

Revenues 189,898.3 151,970.0 103,061.8 150,809.6 126,204.4

EBITDA 60,910.3 48,750.2 29,816.2 48,372.1 48,852.0

Operating income 49,095.0 38,140.3 19,043.7 38,320.1 41,246.0

Interest Expense 4,225.7 4,294.2 4,664.7 5,531.4 3,603.3

Net income from continuing operations 29,241.8 21,528.7 9,073.7 22,029.8 27,022.3

Funds from operations (FFO) 57,162.5 45,359.0 26,016.9 44,719.3 51,324.0

Working capital (8,710.5) (8,882.6) (134.9) 1,034.0 (2,746.0)

Cash flow from operations 48,452.0 36,476.4 25,882.0 45,753.3 48,578.1

Capital expenditures 11,557.9 19,128.3 25,033.8 27,585.8 31,735.9

Free operating cash flow 36,894.1 17,348.1 848.2 18,167.5 16,842.1

Dividends paid 22,056.0 19,698.6 10,385.4 23,819.9 6,694.0

Discretionary cash flow 14,838.1 (2,350.5) (9,537.2) (5,652.4) 10,148.2

Cash and short-term investments 5,000.0 5,000.1 5,000.0 5,000.0 5,000.0


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Table 3

Saudi Basic Industries Corp. -- Financial Summary (cont.)

Debt 57,596.3 71,033.9 66,587.3 60,396.9 52,355.1

Equity 189,205.6 166,146.6 152,630.2 146,641.6 134,496.3

Adjusted ratios

EBITDA margin (%) 32.1 32.1 28.9 32.1 38.7

Return on capital (%) 20.8 17.2 9.3 20.9 30.3

FFO/debt (%) 99.2 63.9 39.1 74.0 98.0

Cash flow from operations/debt (%) 84.1 51.4 38.9 75.8 92.8

Free operating cash flow/debt (%) 64.1 24.4 1.3 30.1 32.2

Discretionary cash flow/debt (%) 25.8 (3.3) (14.3) (9.4) 19.4

Debt/EBITDA (x) 0.9 1.5 2.2 1.2 1.1

Debt/debt and equity (%) 23.3 29.9 30.4 29.2 28.0

Related Criteria And Research

• Methodology and Assumptions: Liquidity Descriptors for Global Corporate Issuers, Sept. 28, 2011

• Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009

• Key Credit Factors: Business and Financial Risks In The Commodity And Specialty Chemical Industry, Nov. 20,

2008

• 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Ratings Detail (As Of November 16, 2012)


Corporate Credit Rating A+/Stable/A-1

Senior Unsecured A+

Corporate Credit Ratings History

29-Sep-2006 Foreign Currency A+/Stable/A-1

14-Sep-2005 A/Stable/A-1

22-Apr-2008 Local Currency A+/Stable/A-1

21-Aug-2006 --/--/NR

14-Sep-2005 --/--/A-1

Business Risk Profile Strong

Financial Risk Profile Modest

Debt Maturities

(As of Dec. 31, 2011)2012: SAR14.6 bil.2013: SAR13.3 bil.2014: SAR14.7 bil.2015 and thereafter: SAR59.5 bil.

*Unless otherwise noted, all ratings in this report are global scale ratings. Standard & Poor's credit ratings on the global scale are comparable

across countries. Standard & Poor's credit ratings on a national scale are relative to obligors or obligations within that specific country.

Additional Contact:


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Industrial Ratings Europe; [email protected]


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