Abu Dhabi: The ADNOC-affiliated petrochemicals company Borouge has posted a 33 per cent year-on-year increase in Q2-2024 net profit to $308 million. The ADX-listed firm attributed the growth in profits to higher sales and cost efficiencies as the company recorded its highest-ever production volumes.
Borouge posted Q2 revenue of $1.5 billion, up 6 per cent year-on-year, beating analysts’ expectations. The company delivered a 41 per cent EBITDA margin and record production volumes, up from 37 per cent a year earlier.
Adjusted EBITDA surged 18 per cent YoY to $613 million in the second quarter (Q2), underpinned by a 6 per cent increase in revenue and a 6 per cent improvement in cost per tonne. Borouge said its premium products continue to drive strong sales performance, underlining the company’s resilience in a challenging global market environment for the broader petrochemicals industry.
“The company is leveraging its competitive advantage in the Asia Pacific, the Middle East, and Africa, driven by superior technology, innovation, operational excellence, and an extensive sales and marketing network,” it said.
Dividend policy
Borouge said it also remains committed to distributing a $1.3 billion dividend in 2024.
For the first half (H1) of 2024, the company reported a net profit of $581 million, an increase of 35 per cent YoY, with adjusted EBITDA increasing 21 per cent to $1.18 billion. H1 revenue of $2.81 billion was unchanged from a year earlier, while costs, excluding depreciation and amortisation, decreased 11 per cent due to a continued commitment to rigorous cost management.
The company has reaffirmed its intention to maintain a $1.3 billion dividend for 2024, or 15.88 fils per share, providing a current yield of almost 6.5 per cent.
Shareholders are scheduled to meet at a general meeting in the third quarter to approve the distribution of 7.94 fils per share interim dividend.
Profitability driver
A key driver of Borouge’s profitability is its sustained price premia for polyethene and polypropylene, which remained robust at $198 and $138 per tonne, respectively, in Q2, the company said.
This was in line with Borouge's mid-term through-the-cycle guidance, which management reiterates. Borouge achieved record quarterly production levels, driven by outstanding capacity utilisation rates of 114 per cent for polyethene and 103 per cent for polypropylene. This was supported by an ongoing focus on process safety and asset reliability, which stood at 97 per cent in Q2.
Hazeem Sultan Al Suwaidi, Borouge’s Chief Executive Officer, said, “Borouge stands out globally for its operational excellence and determined focus on value creation, as reflected in peak utilisation rates, record production volumes, and industry-leading EBITDA margins.”
Al Suwaidi said, “Our priority is to drive accelerated growth through capacity expansion, optimal productivity and a focus on high-value customer segments.”
Borouge 4 complex
The company CEO has promised to deliver a “transformational increase in production volumes” through the Borouge 4 complex—the company’s second ethylene unit EU2—and as part of a consortium drawing plans for a new speciality polyolefins plant in China.
“An ambitious artificial intelligence programme is also powering growth and enhancing productivity, safety and sustainability to unlock significant financial value,” said the CEO.
The company has reached over 70% completion of the Borouge 4 facility mega project, which will increase production capacity by 28 per cent, making Al Ruwais Industrial City the biggest integrated single-site polyolefin complex in the world. The project, built by Borouge on behalf of the project’s owners, ADNOC and Borealis, is scheduled for completion at the end of 2025 and is projected to generate an additional $1.5 - $1.9 billion in annual revenue.
Sales volumes rose by 16 per cent in Q2, supported by the infrastructure solutions segment.
Borouge reported revenue of $1.5 billion in Q2, up 6 per cent year over year. Sales volumes increased 16 per cent quarter over quarter (QoQ), driven by a focus on high-value segments, with infrastructure solutions contributing 41% of sales volumes.
Average sales prices softened marginally in the quarter, with a small gain for polypropylene offset by a slight decline for polyethene. Global benchmarks rose 4 per cent and 2 per cent QoQ, respectively. Asia Pacific accounted for 66 per cent of sales volume, unchanged YoY, with the Middle East and Africa advancing to 28 per cent from 27 per cent a year earlier as the company optimised its regional sales mix.
Adjusted EBITDA increased to $613 million from $518 million a year earlier, with the company achieving management guidance on price premia despite the challenging market conditions.
