Dubai: The ADNOC joint venture Borouge recorded operating profits of $1.14 billion for the nine months ended September, down 32 per cent from a year ago as average selling prices remained under pressure.
Net profit for these nine months came to $713 million, down 39 per cent. Revenue for the period was $4.29 billion against $5.1 billion for the year ago.
But the ADX-listed company, which is into petrochemicals, did see sales volumes gain 16 per cent during the July to September period, and doing much to ‘counteract’ the squeeze on its selling prices.
“Sales volumes from energy and infrastructure solutions represent 38 per cent of overall sales in the third quarter,” said the company in a statement. “This is part of Borouge’s strategy to focus on durable products for industrial applications.” (Borouge is a joint venture between ADNOC and Borealis, one of the biggest names in polyolefin solutions.)
Asia-Pacific remains its largest market, with 62 per cent of total volumes, followed by the Middle East and Africa with 30 per cent.
On ADX, the stock - which is at Dh2.5 - has been mostly flat in the year-to-date.
1.4 million tonnes a yearThe expected polyethylene production capacity increase within the Borouge 4 project
Move with caution
In the near-term, 'The overall polyolefins market remains challenging, with pricing expected to operate within a narrow band of volatility throughout the fourth quarter of 2023," a statement said.
Yet, "Borouge remains well-positioned to deliver product premia versus benchmarks through-the-cycle given the company’s competitive and cost-advantaged feedstock position, economies of scale through one of the world’s largest integrated polyolefins complexes, superior 'Borealis Borstar' proprietary technology and the company’s leading position in key growing and sustainable market segments."
And when it comes specifically to the Q3-23 performance, the Borouge CEO Hazeem Sultan Al Suwaidi said: "Borouge has delivered robust operating and financial performance, leveraging the company’s competitive advantages and maintaining disciplined cost management. Consequently, sales volumes have grown, and we remain committed to innovation to expand market share and maintain strong pricing premia."
More from 'Value Enhancement Programme'
Through the recent operational period, the Abu Dhabi company is getting more through its 'Value Enhancement Programme', which aims at improving cost efficiencies across the board. The effort has to date been 'exceeding its target of $400 million' and delivered a $420 million 'positive impact' year-to-date.
Borouge is 'now pursuing a higher target of $500 million to mitigate the steep price decline in the current challenging market environment'.
"The programme is one of the industry’s most ambitious revenue enhancement and cost saving programmes, delivering a considerable positive impact to the bottom-line in a challenging environment and positioning Borouge as a leader among its regional and international peers," the statement added.