Saudi Basic Industries Corporation (2010) Earnings Call Transcript & Summary

Ladies and gentlemen, this is Faisal Arab, and I would like to welcome you all to SABIC's earnings call for the first quarter of 2023. Now please allow me to hand over the call to Mr. Khaled Bin Salamah, Director of Institutional Shareholder Relations and Acting Global Investor Relations Officer of SABIC. Mr. Khaled, please go ahead.

Thank you, Faisal. Good afternoon, and thank you for joining us today. I am Khaled Bin Salamah, Acting Global Investor Relations Officer. Today's call will be led by our CEO, Engineer Abdulrahman Al-Fageeh; and our VP, Governance and Global Controllership, Mr. Jens Lohmann. I hope you are all well. Before we begin, just a typical note that we would appreciate if you could keep the questions to SABIC only. As usual, we will be more than happy to facilitate any clarifications with other SABIC listed affiliates. I would like you to note that any statements made during this call relating to matters that are not historical facts may be forward-looking statements. These statements are based upon assumptions of management, which are believed to be reasonable at the time made and are subject to certain risks and uncertainties. The actual results could differ materially from those forward-looking statements. Please refer to the statements in the presentation slides and our financial reports, which are available at sabic.com. With that, I will now hand over the call to our CEO.

Thank you. Ladies and gentlemen, good day to all of you. I hope that you and your families are keeping healthy and safe. We want to start, as usual, with sharing a few highlights for this past quarter of the year -- the first quarter of year 2023 with you. With the revenues of USD 10.6 billion, we have generated an EBITDA of USD 1.4 billion and reported a net income of USD 0.2 billion in the first 3 months of this year. We are closely monitoring the changes and the recovery of the global market demand. New capacities in the first quarter of this year are adding more pressure on global prices, while there is limited relief on the variable costs. We continue to keep our operating cost under control and maintain our strong balance sheet. Despite current market uncertainties, the determination to deliver on our growth, innovation and sustainability remains intact. SABIC's long-term credit rating of A1 or A+ was a front in March and April with a positive or stable outlook. Our commitments to innovation and sustainability was demonstrated this quarter through winning 3 gold and 2 bronze awards in the prestigious Edison Award. This is the third consecutive year being recognized, signifying our constant leadership and new technology development and innovation that supports our continued business growth and a more sustainable planet. We move to the next slide. We are guided by our ambition to become the preferred world leader in chemicals and determined to create value to people and our planet and also our shareholders. Our priorities in this year 2023, can be summarized in the 4 themes. First, we will look to maximize the value creation for our corporate programs, which is focused on asset performance, working capital optimization, digitalization and cost control. And we will also strengthen SABIC strategic relationship with our major shareholders, Saudi Aramco, further looking into streams of integrations and cooperations. Second, we are determined to explore, develop and execute growth options in an effective, affordable and sustainable way, both globally and in the Kingdom of Saudi Arabia. We will do it by establishing a strategic partnership that enable us to achieve better performance in managing and managing risk. SABIC is fully supporting the Saudi Vision 2030, which lays emphasis on creating economic resilience and further diversify and grow the industrial fabric in Saudi Arabia. We will position naturally as a chemical champion, and we will aim to be a key enabler to the Saudi transformation. In the first quarter, SABIC signed a framework agreement with Shareek Program to manufacture the catalysis with the aim of transforming Saudi Arabia into manufacturing hub for specialized material in the line of the national industrial strategy. Third, none of the above can be achieved without fostering a company culture of belonging, a culture of performance, and an organization that is ready in terms of capabilities and capacity with highly skilled, energized and engaged employees. Finally, yet importantly, carbon neutrality, circular economy and ESG are integral to our strategy, and will continue to be the focus. We will continue to deliver on our targets to pursue responsible and profitable growth for the long term. Next slide, please. SABIC is committed to continue leadership and innovation as a driving force to our growth and our sustainable solutions for our customers and business partners. This commitment has been recognized with 5 prestigious Edison Awards in 2023 in 3 different categories, reflecting SABIC's diverse range of innovative solutions, food and agriculture, material science and sustainability. The awards and our excellence in new product and service development, marketing design, innovation and determination of addressing the world's biggest challenges. We were also recognized with the second most innovative company in Saudi Arabia by Forbes Middle East and North Africa and The Research, Development and Innovation Authority, RDIA, based on innovation, sustainability and ESG performance criteria. Another key milestone in our carbon neutrality journey has been the successful commercial shipment of independently certified low carbon emission ammonia or what they call it low ammonia from Saudi Arabia to Japan, in addition to the 1 that we have supplied to Korea last year. And today also we announce the third 1 that has been delivered to our customers in India. In addition, in March, we announced an agreement to assess the RotoDynamic Reactor, which is RDR technology to support the decarbonization of ethylene production. This new collaboration is 1 of the SABIC's many active programs aimed at reducing and ultimately eliminating the carbon dioxide emissions from the manufacturing facilities, as well as supporting customers on their energy transition journeys. Also in March, SABIC joined the Value Balancing Alliance, VBA, a nonprofitable organization, which accounts more than 25 international companies across the multiple industries and sectors as members, and we are collaborating with the VBA and its members to advance methodologies for measuring the value that compromise or that companies provide to society, the economy and the environment. With that, thank you for listening, and I'll hand it over to Jens to shed light on our financial performance. Jens, please?

Thank you for the introduction, Mr. Al-Fageeh, and a warm welcome to our Q1 earnings call also from my side. My name is Jens Lohmann, I'm the Global Controller at SABIC, and I'm happy to introduce our latest financial metrics to you. As you can see by this slide, most of our Q1 financial KPIs moderately improved compared to the last quarter of 2022 in many aspects in spite of headwinds from the market. So let us start with our top line. Compared to prior quarter, sales actually decreased by approximately 8% or roughly USD 900 million to USD 10.6 billion. Now 60% of the quarter-over-quarter decline in revenues is due to volume effects, mainly driven by lower production levels. In addition, our Agri-Nutrients business was exposed to lower selling prices quarter-over-quarter, accounting for approximately 32% of the decline in revenues overall against fourth quarter last year. And hence you will notice later on in this presentation that -- you will notice lower earnings in the Agri-Nutrients segment being more than offset by increased profitability in PetChem, which demonstrates a robustly hedged product portfolio at SABIC. Now within our gross margin, the quarter-over-quarter decline in revenues of USD 900 million was compensated by lower feedstock and utility cost of $670 million, largely driven by the lower volume. But we also recorded a decrease in manufacturing fixed costs by $220 million. Now this upside was driven by lower depreciation, amortization and impairment and restructuring charges, as well as lower P&L effective maintenance costs compared to the prior quarter. Spend discipline was also demonstrated in the functional costs, which were $210 million lower compared to the last quarter. Now all of these factors contributed to a positive recent trends in EBITDA, as shown on the chart, despite headwinds in top line and underpins SABIC's operational and financial resilience. As you can see on the chart, the first quarter EBITDA of USD 1.4 billion was 10% higher than in Q4 2022. And accordingly, SABIC's EBITDA margin actually improved from 11% in Q4 '22 to 13% this past quarter. If we excluded the dilutive margins on the revenues from the Saudi Aramco product, our EBITDA margins would have been slightly higher by 0.5% in both quarters. The share of the net income attributed to SABIC shareholders of USD 180 million in this quarter was 120% higher than in the prior quarter, which is very much in line with the average analyst consensus. Now let me briefly walk you through the prior year comparison. The comparison to Q1 2022 is characterized by significant margin effect of drop in selling prices across all regions and businesses. As reflected on the chart, revenues decreased by 25% year-over-year, down by 3.5% (sic) -- [ USD 3.5 billion ] against Q1 2022. EBITDA in Q1 2023 was 60% lower compared to the same quarter in the prior year. Now a few words on SABIC's working capital, CapEx and cash flows. In Q1, we recorded a reduction of inventory in the first quarter by over USD 760 million, which is very good news. 80% of the depletion of inventory stems from finished goods as a consequence of adjusted capacity utilization, mainly in Europe and in the Americas and major turnarounds in KSA. Now these turnarounds also contributed to a relatively high CapEx spend of USD 830 million in Q1. Nevertheless, SABIC was able to generate free cash flows of USD 1 billion in the first 3 months of the year, which translates to an increase of our net cash position of USD 700 million. So in essence, despite a challenging economic environment, SABIC was able to solidify its net cash position with USD 4.5 billion, which is absolutely unique in our industry. As you will know, most of our industry peers are in a net debt position. In our opinion, this testifies expanded financial room to maneuver and for our growth projects in the areas of liquid to chemicals and catalysts as recently announced. Consequently, our long-term credit rating of A1 and A+ was affirmed in March and April by all rating agencies for the positive stable outlook. Moving on to Slide #7. Now this slide illustrates the demand trends we are seeing in key end industries for SABIC. Let's focus on the right-hand side of the chart. In the first column on the graph, you can see that demand in Q1 year-over-year improved slightly in Packaging, Transportation, Automotive and Healthcare, while it was flat in the remaining sectors. Those are the gray dots. And clearly softening in Agri-Nutrients. On a quarter-over-quarter basis, which is the second column, we observed moderate improvements across end industries. And as a trend, we're expecting low momentum in activity and sentiment in Q2 2023, with lower single-digit increase across key industries, basically a flat trajectory in demand. Moving on to the next slide and our Petrochemicals segment. The EBITDA in our Petrochemicals and Specialties business in Q1 2023 has improved by over 90%, reaching USD 1.06 billion. Now that translates to a $500 million improvement versus last quarter. Now over 2/3 of the quarter-over-quarter increase in EBITDA is attributable to polymers and 1/3 roughly to chemicals. This recent development in earnings was largely driven by lower volume-driven barrel costs. As mentioned before, our sales volume decreased. Lower fixed cash costs, lower utility prices and an improvement in spreads, in particular, in MEG and PE. Now these positive impacts were partially offset by higher feedstock prices versus prior quarter, which increased by 2% on average for propane, butane as well as naphtha. Hence, the Q1 EBITDA margin of PetChem was at 11%, higher than the 6% EBITDA margin achieved in the previous quarter. Selling prices showed robustness in the PetChem business, mainly due to restocking activities in the market and anticipated demand from China. As indicated before, in some of our PetChem manufacturing facilities in case, A, turnaround activities have been running in the first quarter. We also responded to softer demand by curtailing output and hence lower capacity utilization, for instance, in Europe and in the Americas. The look back compared to the same quarter in the last year, PetChem and Specialties EBITDA declined by 59% [ trailing ] to $2.5 billion, almost entirely due to lower selling prices across the PetChem portfolio, which you will see on the next slide. Now this picture illustrates the movement in market reference prices in our key petrochemicals products in key regions, quarter-over-quarter. This is in orange and year-over-year in blue. Just the visual graphs alone implies recovery in markets across products and regions after the economic cool down with high inflation and elevated interest rates, which we observed in the second half of last year and which will dominate the economics also going forward. As you can see on the chart, the obvious year-on-year price collapse in blue has turned into a sequential quarter-on-quarter upturn. On the quality comparison, MEG prices increased by 10% due to higher demand fueled by China's economic recovery. Buyers entered into the market to replenish their inventories after the holiday season in anticipation of a short supply -- potential short supply. The rest of Asia and EMEA region also supported the MEG growth in Q1. Methanol prices that indicate early signs of recovery as well. We observed solid demand from downstream industries. Selling price in MTBE increased moderately in the first quarter compared to the previous quarter. PE and PE prices also showed slight increases in the first quarter. Buying sentiment grew following the consumption of inventories built before the Lunar New Year holiday. However, we saw a slow recovery of PP demand in China than actually expected. Due to a favorable product mix between commodities and compounds, SABIC withstood downward pressure on polycarbonate market prices in the first quarter, driven by large imports from China to Europe and in the EMEA to North America. Moving on to Slide #10. Now this slide reflects the integrated spreads of PetChem benchmark prices over primary stock cost -- feedstock costs for our key products in key regions, explaining short-term market dynamics. In the first quarter, spreads of PE and PP remained almost flat with the exception of the Americas. Product margins in China show slight improvements after reopening. However, as said, demand recovery turned out to be slower than expected. MAG spreads in China also advanced sequentially quarter-over-quarter, but still remained negative due to overcapacities and large inventory levels. The trend in methanol spreads in Europe is still negative, but losing momentum due to the sharp decline in methane feedstock costs by 51% in this quarter. Moving on to Slide 11, and referring to our Agri-Nutrients business. In our Agri-Nutrients segment, in Q1, EBITDA was at USD 300 million, which was 54% lower than in prior quarter, primarily due to lower average selling prices, softer demand and lower production output. However, the unique market conditions since end of 2021 still supports strong Agri-Nutrients earnings. Average selling prices, however, decreased 28% quarter-over-quarter with seasonal effects in oversupplied market and stagnant demand. Urea prices, for instance, account for more than 30% decrease in prices. Sales volumes also decreased in evolutions by 21%, largely due to planned turnarounds in the Kingdom. On a year-over-year basis, the Q1 EBITDA was lower by 61% compared to the same quarter in the previous year, clearly driven as well by lower average selling prices, as indicated in the chart. So we're really talking about a completely different economic environment in Q1 versus Q1 last year. On April 10, 2023, SABIC Agri-Nutrients has successfully completed procedures to acquire 49% shareholding in ETG Inputs Holdco Limited, short version is EIHL. The financial impact of this transaction will be visible -- will be reflected during the second quarter of 2023. So you will see that in 2023 Q2 financial statements. The partial -- the acquisition of EIHL is part of SABIC Agri-Nutrients strategy to integrate the value chain and include the blending and distribution of Agri-Nutrients in the global markets, moving closer to farmers and customers. SABIC will be benefiting from EIHL's presence across Africa, for instance. Moving on to Slide #12, our metals business, Hadeed. Hadeed reported an EBITDA of USD 31 million in Q1, which translates to a minus of 50%, and this was due to lower margins on the back of a decline of average selling prices, combined with higher variable costs and partially offset by lower manufacturing costs. So it's a typical margin squeeze situation for Hadeed. Compared to Q1 2022, EBITDA was down by 75%, driven by volume and price effects equally. Also here, low manufacturing costs could not fully compensate for the decline in selling prices. And with that, I will hand back over to our CEO, Mr. Al-Fageeh.

Thank you very much, Jens. Going to Slide 13, okay? SABIC expects an average of global GDP growth rate of 2.1% for the 2023. In the current macroeconomic environment characterized by high uncertainties, our focus was a safe and reliable and integral operations to serve our customers and business partners. Definitely that will remains. We continue to put emphasis on the financial resilience, efficient operational performance and a strong balance sheet. We also expect margins to be continuously under pressure in the second quarter, or the second half of the year. We are carefully optimistic to see a slight but [ price ] recovery and demand. Thank you very much. And back now to Faisal for arranging the Q&A.

[Operator Instructions] First question from Pratik, HSBC.

I have 2. The first 1 is that SABIC has a global presence, right? You have plants in Saudi, China, Europe and U.S. Could you give us a profitability margin for SABIC on a regional basis, how well those assets are doing on a regional basis? And which regions are problematic and dragging down the profitability? So that's #1 question. The #2 question is on your expected synergies from the Aramco deal for the rest of 2023.

So in terms of profitability in the regions, the profit in the regions follow the overall economic dynamics in the regions. Certainly, in the Americas and in Europe as margins are under pressure, also our business is under pressure. So we respond to that with transformation projects that are running in the Americas and in Europe for quite some time. In Europe, we started with that long before our peers did. And as we're running integrated businesses between KSA and Europe and the Americas, there's no real simple regional performance. But we certainly are observing and monitoring the profitability of our assets in Europe are now taking respective actions. So we are aware of a margin squeeze in those regions and correspondingly we are monitoring the cost situation in particular.

For the expected synergies with Aramco, let me just shed light here on some of what we are doing with our major shareholders, Saudi Aramco. Actually, there is so many dimensions that we work to get [ access to ] the transaction took place through our collaboration and integration committee. And the target that has been set is between $1.3 billion to 1.5 -- sorry, $1.5 billion to $1.8 billion, and the SABIC side that has to be achieved from the synergies with Aramco. And I can tell you that we are moving very well, actually, while exceeding the targets for the last year. And also, we are exceeding the target for this quarter, and we remain that we are going to achieve the target of the $1.5 billion to $1.8 billion.

Next question is from Sashank Lanka from Bank of America.

I have 3 questions if that is fine. The first 1 is, looking at your PetChems and Specialty business, your EBITDA did go up quarter-on-quarter. Margins also quite strong. So just wondering, I know you spoke about lower fixed cash costs, utility costs. But can you just talk -- give us some more color on how we should look at margins in this segment, especially going into the rest of the year? And could we expect an improvement there? That's the first question. The second question is going back to the synergies point. I wanted to know if there's any specific segmentation within the synergies where you think there's still value to be realized and something that you can work on in the coming months? And the third question is the low carbon emissions ammonia. I was just wondering how is this different from blue ammonia because you haven't explicitly stated blue ammonia here. And given a lot of companies in the region, especially SABIC, it is at the forefront of shipping this. Any guidance on CapEx and how we should be thinking about returns for the blue ammonia projects? That would be very helpful.

Very good. Yes. Thank you for the question, Sashank. I will pick up the first question. In terms of the PetChem EBITDA. The [ signals ] that we receive from the markets are very diverse in trends. Depending on the product, depending on the regions, you will get very different answers and projections. Overall, in Q2, we expect another very visible upward trajectory. So Q2 will be very stable. Most probably for the second half of the year, we're very carefully optimistic, but it's a very fragile growth trajectory that we may see. So the uncertainty, as Mr. Al-Fageeh highlighted, will remain in the markets. So it's really hard to predict any major upside for the second half of the year.

And if I take the second and the third, thank you Sashank for the questions and the synergies. And as I have said, I mean, the result is more than what we have anticipated in the beginning. But I can tell you that the synergies with the Aramco site, I think that can perform better. And I think we are expecting that we'll have more from the synergies with the refineries that Aramco has owned, whether here in the Kingdom or outside the Kingdom. Some of them are medium to long term, and this is what we are studying at this point in time. But I can tell you that there is a huge opportunity in that synergies. As the low carbon emission ammonia, and I think this is the same. That is the blue ammonia that has been announced earlier. And we are expecting that these shipments of this low carbon emission ammonia is going to open up the market in the fuel and in the mixed fuel strategies that those countries are adapting to, and will definitely enhance also our ability to produce more of those in the future.

Next question from Alex Comer from JPMorgan.

I had a couple of questions. First of all, just if we go to the revenues. You've got volumes down 21%, price down 28%, and your sales are only at 35 [Technical Difficulty]...

Alex, 1 second, please. I think the sound, I think is not very clear. Can you repeat the question, please?

If I look at the volume and price effects in agri-chemicals business, it comes -- volumes were down 21%, price down 28%, but overall sales, I think we're only down 35% quarter-on-quarter. So just wondering what the difference is there on what I'm missing there. My second question is, we're seeing some capacity come up on stream from previous plant shutdown in the U.S., for instance, and elsewhere. I'm just wondering whether you're seeing any particular pressure on any product I'm thinking perhaps in polypropylene? My third question is, were you EBITDA positive in the quarter in your European business? And with regard to Europe, where do you stand on bringing the Wilton cracker back into service?

I will take the first question. Thank you, Alex. In terms of the Agri-Nutrients sales in quarter 1, yes, it was a mix of these 2 effects, volume and price. As mentioned before, price -- the average selling prices went down by roughly 28%, plus we had a volume decrease. So you can say that out of the, let's say, roughly $500 million of revenue decrease in Agri-Nutrients, $200 million were attributable to volumes, $300 million roughly were attributed to the price effects. So that's the Agri-Nutrients, basically the narrative for the top line in Agri-Nutrients in the Q1. When it comes to the EBITDA, I'm picking up the third question, when it comes to EBITDA, in Europe -- yes, in the EBITDA in Europe was under pressure in Q1. We are -- it was not positive, but we are on a more positive trajectory going forward, hopefully, with the restructuring measures that we have initiated. But at the moment, Europe is for certain an area to observe for us.

And for the cracker in Wilton, hopefully, we are going to bring this before the end of the year. But the most importantly is when we bring back, I mean, the operations in Wilton to make sure that it's also hitting our objective in the decarbonization and making sure that they need technologies and the new [indiscernible] that we are adopting as a gas for the cracker is to make sure that it does meet our requirements and all standards, and the sustainability and our future studies. I think Alex still have a question on the polypropylene. Yes, the good thing is about the polypropylene business, I mean, there is a -- despite the capacity that comes on the stream, the good thing in the polypropylene application, that can go to so many segments. And also the other good things in SABIC, I think the percentage of the differentiated and higher added value of our polypropylene segment is the highest among our polyolefins. So I think that would help SABIC -- [ and one ] help us to improve our profitability in the future.

Next question we have from Faisal Azmeh from Goldman Sachs.

Just maybe 2 questions on my end. At the Analyst Day last year, you mentioned some long-term growth plans. I wanted to check whether it would be possible now to share kind of some long-term targets in terms of where you see SABIC's production can go up to? Are we looking at high double-digit figures? Is it potentially that it can double over time? Maybe if you can give us just some guidance towards where you expect SABIC to be in 10 years' time? And what kind of overall CapEx should we think about to get to those production numbers. That's my first question. My second question is more near term. What is the level of CapEx that you expect for this year in terms of -- for the overall business, particularly on the maintenance CapEx side? And thirdly, just a quick 1 in terms of the fertilizer business. When we look at volumes, they were down Q-on-Q and Q1. Have trends reversed this quarter? Are you seeing a meaningful pickup in underlying demand? It would be helpful to share some color there.

Thank you, Faisal. I'll take the first question, then Jens will take the second. In terms of our long-term targets for the growth of the company. As you may know, we are supporting the Vision 2030 of the Kingdom. Also the transformation in the way that we do in our business by converting the oil and to chemicals. I think we are -- we have announced that we are going to start the first mega project in [indiscernible], with converting 400,000 barrels of oil into chemicals. And also, we announced also our Fujian cracker in China. That also was supporting the conversion of the liquids into chemicals. This is the starting point. And we are still studying the others, and I think it will come in the pipeline. And definitely, those projects that is announced or going to be announced in the future is going to be [ an advantage ] in a very robust, solid economic business case that the company is studying -- and definitely, this is going to be supporting the value creation and value increase to our shareholders.

So I'll pick up the second question on our CapEx. So near term, we expect CapEx to be in between USD 3.2 billion and USD 3.8 billion for this year. When it comes to the split between run and maintain on the 1 hand side and both projects on the other hand side, let me give you a little bit of light on what happened in Q1. So in Q1, as mentioned, our CapEx was at over USD 800 million. Roughly $600 million of which were investments in reliability, replacement and turnarounds. Now with the exceptional turnaround situation in Q1, the share of turnaround and maintain CapEx was very high in Q1, so that will level down for sure in the quarters to come. So we will have a lower share going forward than observed in the Q1.

Next, we have a question from Ricardo, Morgan Stanley.

A couple of questions on my side. You being very cautious on your outlook for the rest of the year, including the second quarter. So if you could just give us a little bit of a color on which product that you are most cautious with, and you might see some more downside rates given the current outlook? And then, just if I may clarify 1 commentary that you guys said in the introduction on the free cash flow generation during the quarter. You mentioned that on the inventory release, if you could just please just repeat that number. Because I'm pretty much trying to get on -- even though the EBITDA number was higher on a quarterly basis, the free cash flow generation was lower. So I just want to confirm if the decline on the free cash flow was entirely due to the increased CapEx given the turnarounds.

I'll take the first 1 instance. Okay, in the outlook for the products for this year. And let me just tell you, I mean, the beauty of SABIC, I mean portfolio, which is diversified. Among so many products, I mean, that will enable the company to manage very well the cyclical economics and the cycle that we are in at this point of time, which is the trends that we would not see any recovery yet that we are expecting to have. And this is -- will help the company, I mean, by diversifying these portfolio on these products that would help the company to stay strong and also to deliver to our customers and to our business partners the right portfolio that will complement each other.

Yes, on the free cash flow, Ricardo, it's true. Your observation is right. We had a decline in free cash flow quarter-over-quarter. That's on the 1 hand side, certainly a function of the relatively high CapEx in Q1. But also, we had a number of accruals that were set aside in Q4, which became payable in Q1, and that kind of pushed down the free cash flow as well. So there were some timing and phasing effects in our cash.

Next question from Saleh Altwayan, FIM Partners.

This is Saleh from FIM Partners. I just have a question in regards to SABIC Hadeed. 2022 was a very strong year in terms of top line and in terms of sales volume. So my question is, we've been seeing lately some news from either PIF or Aramco with very huge large deals in terms of steel projects, with foreign entities such as in China and [indiscernible] in the world. Can you just clarify why SABIC Hadeed is being left out in that regard? We're not seeing really large projects coming out from that segment. Is it because there's different views in terms of your outlook in the local market as opposed to the government? It seems the government is really bullish on steel demand, whether it's due to shipbuilding, local shipbuilding here or car manufacturing, and SABIC Hadeed is not really that interested. So if you can just clarify your views on the local steel market and where SABIC Hadeed stands on that?

Thank you very much, Saleh, for the question related to our steel strategy and to the Hadeed performance. Let me just clarify your points here, that SABIC is starting to support the local developments for the building and constructions for many, many, many years. And that segment, that has been produced by Hadeed is related to the building and constructions, and we have been supporting for almost 40 years now the development in Saudi Arabia for that segment. As far as other segments, other than the bars and the rebars, I think this is something that has a different strategy and different investments that Hadeed are not in and Hadeed will continue to support the segments that has been started for many, many years and try to also support the strategies that has been established for the Vision of the Kingdom of 2030.

That was the last question. Thank you all for attending SABIC's earnings call for the first quarter of 2023. We will now be adjourning the call. Wishing you all a great weekend ahead.