Borouge Reports $308 Million Net Profit In Q2 2024 With Record Production

Borouge Plc has announced a 33% year-on-year rise in its second-quarter net profit, reaching $308 million. This growth was driven by increased sales and cost efficiencies, marking the company's highest production volumes to date. Adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) also saw an 18% year-on-year increase to $613 million in Q2.

The company’s revenue for the second quarter rose by 6%, with a similar improvement in cost per tonne. These gains reflect ongoing efficiencies from Borouge's Value Enhancement Programme, which contributed a positive impact of $607 million in 2023. The EBITDA margin improved to 41% in Q2 from 37% the previous year.

Borouge’s premium products continued to drive robust sales performance despite a challenging global market for petrochemicals. The company leverages its competitive edge in regions such as Asia Pacific, the Middle East, and Africa through superior technology, innovation, operational excellence, and an extensive sales network.

A significant factor behind Borouge’s profitability is its sustained price premia for polyethylene and polypropylene. In Q2, these premia remained strong at $198 and $138 per tonne respectively. The company achieved record quarterly production levels with capacity utilisation rates of 114% for polyethylene and 103% for polypropylene.

Chief Executive Officer Hazeem Sultan Al Suwaidi stated, "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."

Al Suwaidi added that Borouge plans to significantly increase production volumes through the Borouge 4 complex and a new speciality polyolefins plant in China. An ambitious artificial intelligence programme is also enhancing productivity, safety, and sustainability.

In Q2, Borouge reported revenue of $1.5 billion, up 6% year-on-year. Sales volumes increased by 16% quarter-on-quarter due to a focus on high-value segments like infrastructure solutions, which contributed 41% of sales volumes.

Regional Sales Mix Optimisation

The average sales prices saw minor changes during the quarter; polypropylene prices slightly increased while polyethylene prices declined marginally. Global benchmarks rose by 4% for polypropylene and 2% for polyethylene quarter-on-quarter. Asia Pacific accounted for 66% of sales volume, unchanged year-on-year, while the Middle East and Africa increased to 28% from 27% last year as Borouge optimised its regional sales mix.

Adjusted EBITDA grew from $518 million a year earlier to $613 million in Q2. Despite challenging market conditions, the company met management guidance on price premia.

First Half Financial Performance

For the first half of 2024, Borouge reported a net profit of $581 million, up by 35% year-on-year. Adjusted EBITDA increased by 21% to $1.18 billion during this period. Revenue remained steady at $2.81 billion compared to last year while costs excluding depreciation and amortisation decreased by 11%, thanks to rigorous cost management efforts.

At the Annual General Meeting held on March 28th, Borouge reaffirmed its commitment to maintaining a $1.3 billion dividend for 2024 or 15.88 fils per share. Shareholders will meet again in the third quarter to approve an interim dividend distribution of 7.94 fils per share.

Borouge's focus on high-value segments and regional optimisation continues to drive its strong financial performance despite global market challenges.

With inputs from WAM