Despite a challenging market, Borouge achieves healthy sales volumes and returns to full production capacity. Image Credit: Supplied

Dubai: Abu Dhabi’s ADNOC JV Borouge on Friday said the board has endorsed an interim dividend of $650 million, to be approved by shareholders during the second half of the year. The company also reiterated its commitment to pay $1.3 billion in dividends for 2023.

This comes after the petrochemical company announced its financial results for the three- and six-month periods ended June 30, 2023, with first-half revenues down 19.1 per cent to $2.8 billion.

On a half-yearly basis, adjusted EBITDA declined 35 per cent to $978 million, and net profit was down by 50 per cent to $431 million. The company attributed these declines to lower average selling prices during the period.

The Value Enhancement Program has contributed $253 million to EBITDA in H1-2023

Amidst the challenging market conditions, the Company's Value Enhancement Programme proved to be a substantial positive factor. The program resulted in a significant impact of $253 million in terms of efficiency improvements and revenue optimization year to date. It has effectively helped the company counter external market pressures.

Despite these challenges, the sales volumes in H1-2023 managed to grow by 1.5 per cent year-on-year, reaching 2.4 million metric tonnes.

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"In a challenging market environment, our results for the second quarter and first-half of 2023 are a demonstration of our resilience," said Hazeem Sultan Al Suwaidi, CEO of Borouge. "Following the successful completion of the planned turnaround of our Borouge 2 facility, our production is at a very high utilisation rate."

"In addition, we continue to achieve significant efficiencies through our ambitious Value Enhancement Programme, which is assisting us in mitigating market pressures and positions us for further growth."

Second quarter highlights

In Q2-2023, the petrochemical company’s revenue increased by 2.5 per cent quarter-on-quarter, to reach $1.4 billion, and declined on a year-on-year basis. Borouge reported net income of $231 million for the three months ended June 30, 2023, increasing by 16 per cent compared to the first quarter, supported by a 4 per cent increase in sales, but decreased compared to Q2-2022.

While top and bottom-line performance in Q2 faced year-on-year pricing challenges, Borouge delivered a healthy EBITDA margin of 37 per cent, up 10 per cent compared to the previous quarter, reflecting improved operational efficiencies. Cash conversion was very strong at 96 per cent, with a healthy adjusted operating free cash flow of $496 million, up 31 per cent compared to the previous quarter.

“Pressures from market weakness were partially offset by the positive impact of the Value Enhancement Programme, as well as by healthy sales volumes and the resilience of the Company’s pricing premia compared to benchmarks,” the company said.

Strong volumes for both polyethylene (PE) and polypropylene (PP) included 40 per cent of total sales to the value-added infrastructure segment, representing a high premia end market and strategic growth focus for Borouge. Meanwhile, production resumed at a high utilisation rate following the completion of the planned turnaround of the Borouge 2 facility in Q1.

Pricing premia was maintained above management guidance for both PE ($249/t) and PP ($150/t) despite softening benchmark prices and some compression driven by a challenging market environment.