Borouge Plc, a leading petrochemicals firm known for its innovative polyolefins and technology solutions, has announced a 33% year-on-year (YoY) increase in net profit for the second quarter, reaching $308 million. This growth was driven by higher sales and cost efficiencies, with the company achieving its highest-ever production volumes.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) surged 18% YoY to $613 million in Q2, fueled by a 6% rise in revenue and a 6% improvement in cost per tonne. These gains reflect the sustained efficiencies from the Value Enhancement Programme, which had a $607 million positive impact in 2023. Borouge’s EBITDA margin stood at 41% in Q2, up from 37% a year earlier, maintaining its leadership in industry profitability.Borouge’s premium products continued to drive strong sales, demonstrating the company’s resilience amidst a challenging global petrochemicals market. The company is capitalizing on its competitive advantage in Asia Pacific, the Middle East, and Africa, leveraging superior technology, innovation, operational excellence, and a broad sales and marketing network.Key to Borouge’s industry-leading profitability is its sustained price premium for polyethylene and polypropylene, which remained robust at $198 and $138 per tonne, respectively, in Q2. This aligns with the company’s mid-term guidance. Borouge achieved record quarterly production levels with outstanding capacity utilization rates of 114% for polyethylene and 103% for polypropylene, supported by a focus on process safety and asset reliability, which stood at 97% in Q2.Hazeem Sultan Al Suwaidi, Chief Executive Officer of Borouge, remarked, “Our exceptional financial and operational performance highlights Borouge’s strength and resilience. We are distinguished globally for our operational excellence and commitment to value creation, as seen in our peak utilization rates, record production volumes, and leading EBITDA margins. Our focus is on accelerating growth through capacity expansion, productivity optimization, and targeting high-value customer segments. We are poised to achieve a transformational increase in production volumes through the Borouge 4 complex, our second ethylene unit (EU2), and a new specialty polyolefins plant in China. Our ambitious AI program is also enhancing productivity, safety, and sustainability.”In Q2, Borouge’s revenue increased to $1.5 billion, up 6% YoY, with sales volumes rising 16% quarter-on-quarter (QoQ). The infrastructure solutions segment contributed 41% of sales volumes. Average sales prices experienced a slight decrease, with polypropylene seeing a small gain while polyethylene prices fell slightly. Despite this, global benchmarks rose 4% and 2% QoQ, respectively. Asia Pacific accounted for 66% of sales volume, maintaining its YoY share, while the Middle East and Africa increased to 28% from 27% a year earlier.For the first half (H1) of 2024, Borouge reported a net profit of $581 million, a 35% YoY increase, with adjusted EBITDA rising 21% to $1.18 billion. H1 revenue of $2.81 billion remained unchanged from the previous year, while costs, excluding depreciation and amortization, decreased by 11% due to stringent cost management.Borouge has reaffirmed its commitment to a $1.3 billion dividend for 2024, equating to 15.88 fils per share, offering a current yield of nearly 6.5%. Shareholders are expected to meet in Q3 to approve a 7.94 fils per share interim dividend.Strategic growth initiatives include the feasibility study for a specialty polyolefins complex in China, where Borouge is part of a consortium forming a 50:50 joint venture with Wanrong New Material (Fujian) to build a plant with a 1.6 million-tonne annual capacity. In the UAE, the company is advancing the Borouge 4 mega project, which will boost production capacity by 28% and is on track for completion by the end of 2025. The project, overseen by Borouge on behalf of ADNOC and Borealis, is expected to generate an additional $1.5 to $1.9 billion in annual revenue. Borouge is also enhancing capacity at its second ethylene unit (EU2), aiming to increase olefins and polyolefins production by 230,000 tonnes, with completion slated for 2028 and an anticipated revenue contribution of $220 to $250 million annually.Borouge’s focus on digitalization and artificial intelligence (AI) has driven significant value creation, with $215 million realized in H1 2024 through projects in health and safety, sales, sustainability, and product innovation. The company has installed a real-time optimization system across its ethane crackers and furnaces, analyzing over 150,000 parameters per hour to enhance productivity and reduce emissions.
