Borouge reports $308 million net profit in Q2 2024

Borouge Plc has reported a 33% year-on-year (YoY) increase in second-quarter net profit to $308 million, powered by higher sales and cost efficiencies as the company recorded its highest ever production volumes.

Adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) surged 18% YoY to $613 million in the second quarter (Q2), underpinned by a 6% increase in revenue and a 6% improvement in cost per tonne, reflecting sustained efficiencies from the Value Enhancement Programme that delivered a $607 million positive impact in 2023.

Borouge maintained its industry leadership in profitability, with an EBITDA margin of 41% in Q2, up from 37% a year earlier.

Borouge’s premium products continued to drive strong sales performance, underlining the company’s resilience in a challenging global market environment for the petrochemicals industry.

The company is leveraging its competitive advantage in Asia Pacific, the Middle East, and Africa, driven by superior technology, innovation, operational excellence, and an extensive sales and marketing network.

A key driver of Borouge’s industry-leading profitability is its sustained price premia for polyethylene and polypropylene, which remained robust at $198 and $138 per tonne respectively in Q2.

Borouge achieved record quarterly production levels, driven by outstanding capacity utilisation rates of 114% for polyethylene and 103% for polypropylene, supported by an ongoing focus on process safety and asset reliability, which stood at 97% in Q2.

Hazeem Sultan Al Suwaidi, Chief Executive Officer of Borouge, commented, “We are delivering exceptional financial and operational performance, highlighting the company's remarkable strength and resilience. Borouge stands out globally for its operational excellence and determined focus on value creation, as reflected in peak utilisation rates, record production."

"We will deliver a transformational increase in production volumes through the Borouge 4 complex, our second ethylene unit EU2, and as part of a consortium that is 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,” he added.

Borouge reported revenue of $1.5 billion in Q2, up 6% YoY. Sales volumes increased 16% quarter-on-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 polyethylene, while global benchmarks rose 4% and 2% QoQ respectively.

Asia Pacific accounted for 66% of sales volume, unchanged YoY, with the Middle East and Africa advancing to 28% from 27% 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.

For H1 2024, the company reported a net profit of $581 million, an increase of 35% YoY, with adjusted EBITDA increasing 21% to $1.18 billion. H1 revenue of $2.81 billion was unchanged from a year earlier, while costs, excluding depreciation and amortisation, decreased 11% through a continued commitment to rigorous cost management.

At Borouge's Annual General Meeting on 28th March, the company reaffirmed its intention to maintain a $1.3 billion dividend for 2024, or 15.88 fils per share, providing a significant current yield of almost 6.5%.

Shareholders are scheduled to meet at a general meeting in the third quarter to approve the distribution of a 7.94 fils per share interim dividend.