Borouge beats market expectations as Q1 net profit rises by 37% to $273 million

Borouge Plc has reported a 37% year-on-year increase in first-quarter net profit to $273 million and remains committed to a dividend of $1.3 billion in 2024. The Abu Dhabi-based petrochemicals company, which provides innovative and differentiated polyolefins solutions, cited a stronger pricing premia driven by a focus on high-value product segments and cost efficiencies.

In its Tuesday announcement, the company said it continues to demonstrate significant competitive advantage in key growth markets in Asia Pacific, the Middle East and Africa due to premium solutions suited to sectors such as infrastructure, energy, agriculture, speciality packaging and healthcare.

Strong figures

This resulted in Borouge’s polyethylene price widening to $222 per tonne, up 19% from the previous quarter, and the premium for polypropylene increasing 46% on a quarterly basis to $162 per tonne.
In the first quarter, the overall cost base decreased 20% from a year earlier and 18% on the previous quarter to $739 million, supporting an improvement in Borouge’s industry-leading EBITDA margin to 44%, up from 40% in the fourth quarter.

The company highlighted a continued “highly disciplined approach to managing the cost base” following success with its Value Enhancement Programme in 2023, exceeding targets to result in a positive impact of $607 million in 2023. At its March 28 AGM, Borouge reiterated an intention to maintain a 2024 dividend representing a current yield of 6.5%.

Route to continued success

Hazeem Sultan Al Suwaidi, Borouge Chief Executive Officer of Borouge, commented said that by achieving “robust earnings in the face of difficult global market conditions”, the company had proved remarkable “resilience and agility”.

He continued: “Our strategy remains focused on high value-add segments, maintaining strong customer relationships in the world’s fastest growing economies, and maximising geographic reach.

“This is backed by continuous product innovation and an unwavering commitment to excellence in all aspects of the business, from safety and optimal utilisation at our production facilities in Al Ruwais, to the expansion of our international commercial network.”

Facilities growth

The CEO said that Borouge was entering a transformational phase in its “growth journey”, including progressing the Borouge 4 production facility. Now more than 60% completed, the plant will raise annual capacity by 28% to 6.4 million tonnes and “leverage a new generation of technology to elevate our product profile”.

“The company is also pursuing accelerated global growth prospects, including a significant opportunity in the Asia Pacific region that has reached feasibility stage,” Al Suwaidi added.

Driving higher profitability

Borouge reported first quarter revenue of $1.3 billion; a 6% YoY decline due to lower prices and planned feedstock-related operational maintenance that had a volume impact of 170 kilo tonnes during the quarter.

Operations continued an outstanding production record, reflected by overall asset reliability, which stood at of 99% at the quarter close. Borouge’s average sales prices increased from the previous quarter - 4% for polyethylene and 6% for polypropylene, compared to a 1% rise in global benchmark prices for both products.

Forward thinking

Borouge is advancing plans for a second ethylene unit (EU2) to increase total production of olefins and polyolefins by a further 230,000 tonnes. On completion in 2028, the unit is expected to contribute up to $250 million of annual revenue and, with Borouge 4, will help to boost Borouge’s annual total polyolefin production capacity to reach 6.5 million tonnes.

The firm is also actively implementing digitalisation and artificial intelligence programmes across operations to drive innovation, value creation, and enhance efficiency, with the company targeting approximately $280 million of value generation in coming years.

Additionally, the Borouge Innovation Centre, in Abu Dhabi, has facilitated the introduction of eight groundbreaking products in the last year, including a pioneering solution for gas pipes.