Sabic Eyes Sales in BASF’s German Homeland After Widening Offer

Saudi Basic Industries Corp. (SABIC), the largest chemical maker by market value, plans to take advantage of gaps left in the German market by dominant local BASF SE (BAS) by offering customers a fuller range of plastics and chemicals.

Sabic is marketing itself as a one-stop shop for makers of materials used in goods from cars to medical-gear, Konrad Hellmann, head of the Riyadh-based company’s German operation, said in an interview. Sales volumes in Europe’s biggest economy increased about 10 percent last year.

The Saudi company bought General Electric Co. (GE)’s plastics unit in 2007 and is building up its polymers operation. By contrast, BASF sold its Basell plastics venture in 2005 and shifted styrene operations into a venture last year. Sabic has an opportunity to battle rivals in Germany that can’t supply a full array of plastics, Hellmann said.

“Most global companies don’t want 100 suppliers, instead they want just one supplier that can provide a wide range of products,” Hellmann said. “We can offer the customer everything from a high-performance polymer down to polyethylene and everything in between. Only a few others can do that.”

Sabic, which runs its European operations from Sittard in the Netherlands, in September appointed country leaders across Europe to coordinate polymer, thermoplastic and chemical sales. Customers of one business unit are being introduced to products from other units, Hellmann said yesterday.

Broad Reach

“At the big companies, the original equipment manufacturers, the decisions on which plastics should be used in a product are made in Germany,” Hellmann said. “It’s an advantage when you have a big portfolio and a solution for every materials problem.”

Sabic, which was founded in 1976 to find a use for flare gas burned off during oil extraction, yesterday reported fourth- quarter profit that missed analysts’ estimates. As well as Germany, Chief Executive Officer Mohamed Al-Mady is driving expansion in the faster-growing markets of Asia and Latin America, he said.

Growth may come from acquisitions, as well as internal investment and innovations, Hellmann said. Sabic, which is 70 percent state owned, looks at potential targets that come on the market and wants to expand in specialty chemicals, he said.

Sabic bought Huntsman Corp. (HUN)’s U.K. polymer and chemical units in 2006 for $810 million, adding plants that make ethylene and polyethylene plastics as well as benzene-related chemicals for the European market. A year later it followed with the purchase of GE’s plastics unit for $11.6 billion, gaining operations in the U.S., Asia and Europe.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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