Borouge Reports $328 Million Profit in Third Quarter

Beating market expectations and driven by the company’s highest ever quarterly sales and robust pricing for its premium products, Borouge Plc, a leading provider of innovative and differentiated polyolefins solutions, on Tuesday reported a 16% y-o-y increase in net profit to $328 million for Q3-2024.

Adjusted EBITDA rose by 9% y-o-y to $646 million in Q3, driven by a 7% increase in revenue and the company sustained its industry-leading profitability with an EBITDA margin of 40% for the quarter, Borouge said in a disclosure with Abu Dhabi Stock Exchange (ADX) this morning.

This strong performance was supported by an increase in the price premia commanded by Borouge, driven by differentiated products and strong customer relationships.

Despite ongoing volatility in the global market, the company’s average polyethylene and polypropylene prices were $198 and $160 per tonne higher than their benchmarks – with that premium increasing 14% and 50% y-o-y, respectively, and exceeding management guidance through the cycle.

The company’s management reiterated through-the-cycle guidance of $200 per tonne for polyethylene and $140 per tonne for polypropylene.

Borouge CEO Hazeem Sultan Al Suwaidi said that his company continued to deliver an outstanding financial and operating performance, with net profit increasing for the fifth consecutive quarter.

“Our market-leading profitability is driven by world-class technology, innovation and operational excellence – ensuring that we deliver highly differentiated products to a fast growing base of industrial customers. The third quarter was distinguished by record production levels and our highest-ever sales volume,” he added.

Record Sales Volume

Borouge continues to intensify its focus on high value-add segments, including infrastructure, which accounted for 38% of sales volumes in Q3.

The company’s commitment to operational excellence and the broad reach of its marketing and sales network across Asia, Middle East and Africa, has reinforced the company’s leading position in the fastest growing markets. The Asia Pacific is a key growth region with sales volumes increasing 5% YoY, and accounting for 65% of total sales volumes in Q3.

In Q3, Borouge achieved $1.6 billion in revenue, marking a 7% y-o-y increase. A strategic focus on high-value markets fuelled a 2% y-o-y increase in sales volumes, with infrastructure solutions and other high value segments reinforcing the company’s strong position in this key segment.

Borouge continued to achieve record quarterly production levels in Q3, with capacity utilisation rates of 106% for polyethylene and 109% for polypropylene, supported by a focus on asset reliability, which was at 98% in the quarter.

Capacity Expansion Drives Growth

In the UAE, the Borouge 4 strategic expansion project is progressing rapidly, with 80% of the construction completed. This expansion will boost production capacity by 28%, making Al Ruwais Industrial City the world’s largest integrated single-site polyolefin complex.

The construction of the project, now fully energised through a connection to the national grid, is running on schedule. Upon completion, ownership of Borouge 4 will transfer from ADNOC and Borealis to Borouge. Once fully operational, the project is anticipated to generate an additional $1.5 to $1.9 billion in annual revenue.

Internationally, Borouge has made good progress on the feasibility study for a new specialty polyolefins complex in China. This ambitious venture with Wanrong New Material (Fujian), a subsidiary of Wanhua Chemicals, to construct a state-of-the-art plant in Fuzhou, is set to produce 1.6 million tonnes annually.

Additionally, Borouge is enhancing its second ethylene unit (EU2) to increase the production of olefins and polyolefins by 230,000 tonnes. This expansion, expected to be completed by 2028, is projected to contribute between $220 and $250 million in annual revenue.

Outlook

The company’s management expects a stable macroeconomic outlook across its key markets in the fourth quarter of 2024, with increased signs of improved operating conditions driven by moderate GDP growth.

Strong production and sales volumes are projected to maintain positive momentum, bolstered by a strategic focus on achieving operational efficiencies and serving high value segments. Polyolefin prices are anticipated to stay relatively stable, fluctuating within a narrow range.