ADNOC JV Borouge's 2022 revenues at $6.7b, will pay 'at least' $1.3b as 2023 dividend

Dubai: The ADNOC joint venture Borouge generated $6.7 billion in 2022 revenues, from an 8.2 per cent year-on-year increase from favourable pricing for its speciality products and increased production capacity.

Net profit totalled $1.4 billion, which the ADX-listed firm said is ‘in line with market expectations and holding up well’ in a challenging marketplace. For 2021, the tally was $1.52 billion. 

Borouge is committed to pay $975 million in post-IPO dividends for 2022, and 'at least' $1.3 billion for 2023. There was an interim dividend payout of $325 million made in October last. (It was in June last that Borouge, in which Borealis is the other shareholder, completed a $2 billion IPO and the biggest to date on the ADX.)

Targets international expansion

“As we look ahead to 2023 and beyond, we will continue to execute on our commitment to organic growth, as well as explore new opportunities for expansion in the UAE and internationally, where they complement our long-term growth strategy and reinforce our position as a world-leading polyolefins producer,” said Hazeem Sultan Al Suwaidi, CEO.

Focus will be on geographies and markets that support Borouge's existing strategic priorities.

Overall production capacity grew 10 pe rcent year-on-year, with the ramp-up of Borouge’s PP5 unit adding a significant production capacity of 500 kilo tonnes annually. This would bring more differentiated grades into the Borouge mix and supports ‘premium production’. (Borouge is one of the world's biggest producers of polyolefin.)

Value enhancement

The company is putting together a ‘value enhancement programme’ to enable ‘Borouge pursue future growth opportunities, achieve healthy margins and premia versus benchmark pricing’. Another goal is to scale up its competitive positioning.

The programme should see results coming through from the second-half of 2023 and go a long way to offset market pressures likely to continue through this year.

According to Al Suwaidi, “We are creating an even stronger platform for profitable and sustainable growth, having already begun proactively managing down costs, with the further optimisation of our fixed and variable costs well underway. We are also tapping a range of revenue optimisation opportunities, to continue to drive top-line growth while maintaining healthy margins.

“We expect the programme to yield significant benefits for the company and its shareholders in 2023 and beyond.”

Cost relief

In the final three months of 2022, Borouge made use of 'some cost relief' from reduced shipping costs. If this continues, it would lead to improved margins, according to the company.

"Additionally, with Borouge’s Olefin Conversion Unit playing an important role in bringing a material cost benefit from internally rather than externally sourced propylene feedstock, the unit will be maintained at maximum capacity to support margin enhancement," a statement added. "The company continues to operate comfortably within the top quartile of the global cost curve, owing to its competitive feedstock contracts, economies of scale and young asset fleet."

Widen product mix

“Our operations are of world-class quality and scale, as shown by very strong production volumes, and we are bringing ever-greater differentiation to our production mix, supporting premia and bolstering our competitive positioning," said Al Suwaidi. "We expect demand in our core territories to continue to outperform global markets, and we will press ahead with our strategy of innovation, bringing new products to customers while tactically placing volumes to meet shifting demand.”

Demand highs 

Demand from Asia-Pacific and Middle East markets continues to be stronger than that coming in from developed markets. Sales volumes are expected to return to levels ‘equivalent to production volumes’ aided by the resumption of economic activity in China.

The management expects to continue to realise healthy premia and reiterates over-the-cycle guidance of $200 per tonne for PE and $140 per tonne for PP.