ADNOC joint venture Borouge to stick with $1.3 billion dividend despite challenging market conditions

Dubai: The ADNOC petrochemicals joint venture Borouge will stick to its annual dividend of $1.3 billion for 2024 despite the challenging market conditions impacting the industry. The commitment on dividends demonstrates 'confidence and ability in generating earnings and profits'.

Borouge - which has Borealis as the other major shareholder - retains 'exceptional cash generation and healthy balance-sheet'. Another major positive will be progress on the Borouge 4 project, which will boost Borouge’s production capacity by 1.4 million tonnes per year and its revenue by $1.5 billion to $1.9 billion. This is now 60 per cent complete. (Borealis is owned 75 per cent by Austria's OMV with ADNOC holding 25 per cent.)

"Borouge 4 will boost the company’s production capacity by 28 per cent, making Borouge’s Al Ruwais production site the world’s largest integrated single-site polyolefin complex," said Dr. Sultan Al Jaber, Chairman. 

"I am also pleased to announce a new expansion project. Our second ethylene unit (EU2) is advancing plans to increase our total production of olefins and polyolefins by 230,000 tonne after project completion in 2028, and is expected to contribute approximately $ 220 million to 250 million to Borouge’s revenue per year."

Outside the UAE, the company is pursuing 'accelerated growth opportunities', including in the Asia-Pacific region, which has reached feasibility stage.

Dividend plans

Borouge will soon deliver the final dividend of $650 million, equivalent to 7.94 fils per share, for H2-23, representing a 6.4 per cent dividend yield based on its latest share price.

The $1.3 billion cash dividend for 2024 is equivalent to 15.88 fils per share. The company has more than $3.97 billion in retained earnings at the end 2023 - "Borouge shareholders can expect a secure and very substantial dividend," the statement added.

The company has 'successfully navigated' the bottom of the market cycle to come up with $1 billion in net profit in 2023.

Borouge’s $607 million 'value enhance programme' contributed 28% to last year's EBITDA, the 'highest total impact in any single year of any announced programmes by peers'.

Sales volumes hit a record 5.1 million tonnes, driven by 'exceptional production and industry-leading asset utilisation rates', adding around 200,000 tonnes in polyolefins sales. This in turn contributed $106 million EBITDA in 2023.

"Borouge outperformed its regional and international peers with one of the highest EBITDA margins in the industry at 38 per cent," the statement added. "By continuing to actively manage costs and adapt to evolving market dynamics, Borouge expects to sustain these substantial efficiencies and value."