Chairman of the Board
Advanced is determined to implement its growth strategies by overcoming global economic challenges to contribute to GDP growth and create long- term value in line with the Kingdom's Vision 2030
I am pleased to share with you, on behalf of the Company's Board of Directors, the Annual Board of Directors Report for the financial year 2023. This report includes a comprehensive analysis of Advanced operational performance and its affiliates, transformation initiatives in the areas of human capital and digitization, business strategy and growth projects, as well as environmental, social and governance performance.
Year 2023 witnessed significant challenges for the petrochemical industry and market, characterized by geopolitical tension, economic uncertainty, soaring prices of raw materials, interest rates and additional capacity in the Chinese market.
Despite these challenges, Advanced has remained steadfast in achieving its objectives of meeting the requirements of its customers by maintaining prominent levels of operational performance and sales, adopting continuous rationalization of operations, raising the level of reliability, and enhancing the integrity of its assets.
With regards to the growth strategy, a framework support agreement was signed with Shareek program to enable maximizing the company's local investment plan to achieve Vision 2030, in addition to announcing a strategic project in food security for the production of Methionine. Moreover, signing an agreement with Jubail United Petrochemical Company (a subsidiary of SABIC) to establish a pipeline and supply the associated gas product.
Moreover, the current project of Advanced Polyolefins Company is expected to be completed by the second half of 2024. The Board of Directors is confident that Advanced strategies will be successfully achieved through the commitment of all employees to a culture of excellence.
In conclusion, and on behalf of the Board of Directors and the employees of Advanced, I would like to express my sincere thanks and appreciation to the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud, and his Crown Prince, His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, and our wishes for success to all in 2024.
Chairman of the Board
President and CEO
The company has continued to enhance its performance by achieving the sustainability of the operational excellence and development, as well as continuously implementing growth and transformation initiatives.
Advanced sustainable investment in responsible care, human capital, digitization and maintaining the reliability of factories has led to the achievement of twenty-four million safe working hours, sustainable and safe operation with a reliability rate of more than 98%, and a production rate that exceeded the maximum production capacity, which confirmed the company’s commitment to the future plan towards excellence in the environment, social and governance.
Advanced pays great attention to the aspects of responsible care, developing and improving the reliability of its plants, maintaining a strong financial position, achieving outstanding performance in accordance with industry standards, and profitability has been maintained during tough times of the year through careful attention to operational excellence and reviewing market dynamics.
The company also works to invest in its human resources, qualify them administratively and technically, develop their skills, and provide them with continuous development programs and training opportunities as a contribution to achieving sustainability represented in the company’s Vision and Goals.
Digital transformation has been another essential element of the company’s strategy, as it enabled it to enhance operational efficiency, reduce costs, and improve decision-making processes as the future depends on technological progress. Also, the company is committed to staying at the forefront of this development while maintaining cybersecurity requirements in all its businesses.
In conclusion, I would like to thank the Board of Directors for their unlimited support in all aspects of the business as well as all the employees of Advanced Company and its subsidiaries, and we look forward to continuous improvement and innovation to achieve a “Culture of Excellence”, and I wish all the best and success to everyone in 2024.
President and CEO
Chief Financial Officer
Advanced will continue to invest in enhancement programs to improve and raise the efficiency of spending by adopting the concept of shared services and maintaining sufficient liquidity to meet the needs of the company’s investments to create sustainable value for its shareholders.
Despite the market challenges, Advanced has implemented several profitability initiatives across all areas of the business including production, costs, marketing, financing and cash management, contributing to a net profit of SAR 171 million, a decrease of 42% compared to 2022 (SAR 295 million), due to lower profit margins and sales quantities resulting from the decrease in the amount of propylene as a result of the scheduled periodic maintenance of SATORP. In addition to that, the maintenance work of the Propane pipeline of Jubail companies to improve reliability.
Advanced has reinforced its cost-efficient operating model that balances costs and asset preservation in a manner that ensures their safe and reliable operation. Advanced Company has restructured the credit facilities by obtaining better competitive rates than previous facilities to reduce financing costs and maintain sufficient liquidity for the company’s future projects.
In addition, the company has implemented several programs that will improve and raise efficiency to reduce its capital and operating expenses and establish a marketing subsidiary of the company to market its products, in addition to implementing special programs that utilize shared services between subsidiaries, which contributes to reducing costs.
With regard to the performance of SK Advanced, the management of Advanced company is currently working intensively with the rest of the partners to search for all options that will improve the company’s results, and we trust these efforts will yield satisfactory results for everyone in the future.
And during the coming period, Advanced will continue to invest in its capital programs in its main sectors to create sustainable value for its stakeholders, taking into account the various business challenges and risks, and to mitigate these risks, Advanced Company has implemented effective strategies through financial risk management by developing plans that reduce these challenges in line with growth initiatives and economic hedging measures.
Chief Financial Officer
