We have always believed that regardless of external forces, our fate lies in our own hands, and we have consistently delivered above and beyond our clients’ and customers’ expectations. We have been known for many years as one of the world’s leading logistics providers, and with each year that passes, our name reaches farther and wider. Our performance in 2023 ensures even broader horizons in the years to come.

Navigating challenging markets

The year witnessed peaks and troughs in the global economy, both a cause and effect of oil price fluctuations, high inflation, elevated interest rates, and geopolitical impacts, particularly the ongoing energy consequences of Russia’s invasion of Ukraine. Following the highs of 2022, the VLCC market faced a lull in earnings in the first quarter before rebounding to a peak of USD 98,000 per day, driven by rising Atlantic Basin demand, including increased US Gulf crude exports and a rebound in Chinese imports.

Prices, costs, access, and supply chains were unstable and unpredictable, however, our proven ability to direct and diversify our services provided a steady platform for us to manage market swings to emerge with record profits.

Progressive programs and partnerships

In our constant efforts to identify new opportunities and enter into substantial strategic partnerships, Bahri Logistics signed a 3-year international freight forwarding service agreement with Saudi Arabia Railways (SAR). Bahri will serve as the primary service provider for both imports and exports for SAR, the owner and operator of networks in the Kingdom of Saudi Arabia.

In addition, as we look to establish the Company into the gas transportation sector, we have entered into a strategic collaboration with the Private Sector Partnership Reinforcement Program (Shareek). This will involve an investment of SAR 1.5 Bn., primarily in specialized vessels, between 2024 and 2030, in line with our diversification strategy and the projected global increase in the demand for gas.

Committing to change

As a prominent advocate for change in industry’s impact on the environment, Bahri continues to lead by example. We are proud to say that we have an innate sense of responsibility and a conscience which prioritizes sustainability across all of our business units and operations.

In line with Saudi Vision 2030, we continue to promote long-lasting change that is consistent with our vision and values, actively exploring ways to integrate new sustainability trends and assess risks and vulnerabilities. Our ultimate mission is to not only fulfil our own obligations, but also to encourage the maritime sector as a whole to become more environmentally aware.

Aligning ourselves with the United Nations Sustainable Development Group, Bahri continues to reduce its total energy consumption, decrease intensity of Scope 1 emissions, and decrease plastic and packaging waste. In addition, we continually seek numerous research and development collaborations related to carbon capture technologies and alternative energy sources.

Ethics in practice

As one of the largest global providers of maritime services, it is essential that Bahri is managed according to the highest corporate governance standards, with a stringent framework of transparency, accountability, and integrity.

In communicating our guiding principles to all members of the Bahri workforce, we are able to instill a common culture across all the staff that accentuates the values that are at the heart of our organization. We believe that respect is key to both the Company and colleagues, and is the foundation for long-lasting healthy and mutually beneficial relationships.

With regards to mitigating risk, we work with our business partners and field specialists to assess potential risks and opportunities, for both Bahri and our stakeholders, constantly reviewing and managing a wide range of operational and environmental factors across the Company on a daily basis.

Rewarding our shareholders

Reflecting on our growth and success this year, the Board of Directors has approved a resolution to distribute cash dividends to shareholders at SAR 0.5 per share, equivalent to 5% of the par value per share.

Additionally, the Board recommended to the General Assembly of the Company an increase in capital to SAR 7,382,812,500, with the proposal of issuing 1 bonus share for every 2 shares. This strategic decision aims to fortify the Company’s capital foundation, aligning with anticipated growth and expansion opportunities. The envisioned capital enhancement is intended to facilitate long-term value creation by enabling strategic investments in emerging opportunities.

Forging ahead

As we look to the future, in 2024 we will continue to seek additional strategic partnerships in line with operational and diversification goals, expanding both our geographical footprint and our client base. As an innovative organization with a strong digital presence within the industry, we will explore the ever-evolving options for greater efficiency, enabling us to reduce costs, optimize supplies, and contribute even more to our sustainability goals.

As always, Saudi Vision 2030 will be our guiding light in all operations as we maintain our status as the leading logistics provider for the Kingdom of Saudi Arabia and a significant contributor to the economy, including our role as exclusive maritime shipping provider for Saudi Aramco to the USA, Europe, and the Far East.

Acknowledgements

In closing, I would like to thank our shareholders for their continued trust and to the Government of Saudi Arabia for its support in our industry and the broader economy. While there were certainly challenging market forces during 2023, we have exceeded our clients’ expectations and delivered on our strategies. Once again, Bahri’s performance in 2023 has been remarkable, both operationally and financially, providing us with the perfect platform for 2024.

We entered into mutually-beneficial strategic partnerships, forged important new relationships, and signed significant long-term contracts, which support our strategic progress while remaining well-aligned with our ambition to meaningfully contribute to the ambitions of the Kingdom of Saudi Arabia and the goals of Vision 2030.

We exceeded our net income of SAR 1 Bn. for the second year in a row, a reflection of our operational successes and our growth and diversification strategies. Our Oil, Chemical, Logistics, and Dry Bulk shipping, as well as Bahri Marine and Bahri Ship Management added outstanding value both individually and collectively. With an annual revenue of SAR 8,778 Mn. and net income of SAR 1,613 Mn., 2023 delivered not only impressive returns but also a broader customer base with new verticals, a larger fleet, and additional business segments.

Expansion and Exploration

Despite the economic headwinds, our business segments were both reactive and proactive in their attitudes and actions. The Company-wide expertise needed to assess global change and anticipate market volatility has proved, year after year, that Bahri is an evolving, intelligent business with flexibility and adaptability focused on sustainable expansion.

As part of that evolution, Bahri embarked on its key long-term strategic objectives of fleet renewal and growth targets, by building at International Maritime Industries, supporting the development of the Kingdom of Saudi Arabia’s maritime ecosystem.

With innovation at its core, Bahri Logistics echoes our progressive practices and in 2023 reinforced its status as one of the most inspirational logistics experts in the greater Middle East. As the Company’s most established business unit and a global top 10 breakbulk carrier, Bahri Logistics focused on its diversification strategy, strengthening new verticals in aerospace, perishables, and oil and gas.

Similarly, as part of that ingrained expansion strategy, the teams at Bahri Dry Bulk consistently identified strategically advantageous markets and subsequently entered into its first Contract of Affreightment with SABIC, to carry 400,000 mt of dry bulk freight from the Kingdom of Saudi Arabia to New Orleans, USA.

As we look ahead to enlarging the fleet even further, Bahri Oil continued discussions with the International Maritime Industries, the largest shipyard in the Middle East, to establish a timeline for new builds, with the potential of fresh contracts for several additional cargo shipments for Saudi Aramco in 2024 and beyond.

Our Greatest Resource

We have more than 3,000 colleagues at Bahri who drive the Company engine in every aspect of its operations at all levels. As a professional family with a common belief in our ongoing industry leadership and our aspirations for growth, they are committed to our collective vision. Their diligence and work ethic are pivotal to our business and, as our primary asset, their welfare and safety is our primary concern.

In 2023, Bahri’s organizational structure, business model, and strategic direction underwent changes as part of its HR transformation journey to achieve several HR Strategic Pillars, including improving performance culture, enhancing employee experience, and becoming an employer of choice in the industry.

We have created a working environment which appreciates the unwavering efforts of our colleagues and treats them with equality, dignity, and respect. We provide the resources and the opportunities to advance their personal development and support them in realizing their own ambitions. Working in a single community with mutual respect and a shared passion for success have culminated, once again, in our collective results being outstanding.

Eco-Friendly Ethos

Our commitment to sustainability is uppermost in our contribution to Saudi Vision 2030. Not only do we play a major role in the Kingdom of Saudi Arabia’s logistical capacity but also in our efforts as a guardian of the environment.

We continue to operate towards a carbon-neutral future, investing heavily in eco-ships and in 2023, as part of our growth plans to enter the geared-vessel segment, Bahri Dry Bulk acquired 2 environmentallyfriendly Ultramax bulk carriers.

Furthermore, aligning itself further to the Company’s environmental pledge, Bahri Chemical, which achieved record revenues of SAR 2,732 Mn. and a net income of SAR 798 Mn. in 2023, added 3 green vessels with DF capability to its fleet.

In our commitment towards a circular economy, Bahri Oil’s capital recycling program garnered pace during 2023 as 5 ships, 2 VLCCs and 3 MR tankers, were divested, realizing best value for the Company. In addition, Bahri achieved its key objectives of modernizing the fleet, by replacing 2 older vessels with modern eco-friendly tonnage and enhanced market competitiveness, almost tripling scrubber fitted ships.

Driving Digital Solutions

Technology and innovation continue to dominate the efficiency and effectiveness of all logistics organizations, in terms of both internal and external processes and practices. As a leader in its acquisition and implementation, we continually optimize the value of digital transformation in every area of our operations.

Bahri Chemical’s newly constructed platforms for intelligence gathering, agile decision-making, and enhanced reporting have proved invaluable, as has Bahri Logistics’ technology, whose Transport Management System and Warehouse Management System have proved both time-efficient and costeffective.

Maximizing its use of innovation, Bahri Dry Bulk has digitized most of the business unit’s key metrics, covering commercial, operational, and financial KPIs, as well as a supply and demand forecasting tool.

Looking Forward

As we look to the future, Bahri will forge ahead with its sustainable expansion strategies, including the launch of its new office in Singapore and strengthening our presence in the USA.

In addition, next year is a critical time for our floating desalination project. The 3 plants are expected to reach their commercial operation date by mid-2024 as we enter the world’s largest desalination market.

Bahri has just completed a year characterized by prosperous leadership and success and I would like to express my gratitude to my fellow members of the Executive management team and all of our employees for their ongoing support and commitment in making Bahri a world-class shipping and logistics company.

I also wish to extend my thanks to the Board of Directors for their wisdom and guidance during an outstanding year of growth for the Company. Finally, I extend my sincere appreciation to our customers, who have played a pivotal role in the continuation of our operations and the further development of Bahri at all levels.

Financial Results in Summary

Bahri achieved unprecedented success during 2023 and ended the year with a strong bottom line at 55% growth in net profits compared to the prior year. Despite global economic and political challenges, Bahri managed to strategize its long-term objectives by being proactive with regards to market uncertainties. Strong tailwinds in TCE rates throughout the year coupled with effective fleet deployment resulted in a positive year for the Company. Further, timely induction of 10 eco-friendly Chemical Tankers (IMO2 MRs) in the previous year allowed Bahri to capture the increase in global demand for energy efficient tankers. In addition, Bahri focused on the reduction of costs posed due to ageing fleet and uplifted the cash base by efficiently disposing of old fleet, resulting in a notable gain. During the year, Bahri divested 2 VLCCs, 3 MR Tankers and 4 Chemical Tankers with a gain of SAR 225 million. The Company also acquired 2 eco-friendly Ultramax bulk carriers.

Bahri Group’s Financial Performance

Bahri Group recorded a year-end net profit of SAR 1,613 million in 2023 as compared to SAR 1,041 million in 2022. Bahri Oil recorded a profit before Zakat and tax of SAR 932 million, compared to SAR 772 million in 2022. The fluctuation in results was mainly due to an increase in the TCE rate, which jumped from an average of USD 35.3 thousand per day in 2022 to an average of USD 44.6 thousand per day in 2023.

Bahri Chemicals closed the year with a high profit before Zakat and tax of SAR 818 million compared to SAR 385 million in 2022, mainly due to the improvement of the TCE rate and the increase in the number of fleets. The average TCE rate increased significantly to USD 31.9 thousand per day in 2023 compared to USD 25.3 thousand per day in 2022. Further, gain on disposal of 4 Chemical Tankers, and the reimbursement of certain claims from the insurance company and supplier with respect to tanker coating resulted in an increase in profit for Bahri Chemicals.

The logistics segment yielded a net profit before Zakat and tax amounting to SAR 46 million in 2023, which is in line with the profits of 2022 amounting SAR 48 million.

Bahri Dry Bulk recorded a significant decrease in profit before Zakat and tax of SAR 59.2 million compared to SAR 122 million in 2022. The TCE rate decreased significantly to an average of USD 16.2 thousand per day in 2023 compared to USD 25.7 thousand per day in 2022.

In 2023, the share of results from equity-accounted investees was SAR 266 million in income (compared to SAR 60 million in 2022). These were a result of income from Petredec Group with SAR 406 million, which was offset by a loss of SAR 132 million from IMI and a loss of SAR 7.6 million from National Grain Company.