Borouge’s Revenues Grow to $2.8 Billion in H1 of 2023

Borouge, a leading petrochemical company listed on Abu Dhabi Securities Exchange (ADX) and that provides innovative and differentiated polyolefin solutions, posted a revenue of $2.8 billion and adjusted EBITDA of $978 million.

Releasing its financial results for the Q1- and H1 2023 financial results on Friday, the company said that its ambitious Value Enhancement Programme delivered a material $253 million impact in efficiencies and revenue optimisation year to date and is a significant and positive contributor to countering external market pressures.

Hazeem Sultan Al Suwaidi, Chief Executive Officer of Borouge, said that in a challenging market environment, our results for the second quarter and first half of 2023 are a demonstration of the company’s resilience.

“Following the successful completion of the planned turnaround of our Borouge 2 facility, our production is at a very high utilisation rate. In addition, we continue to achieve significant efficiencies through our ambitious Value Enhancement Programme, which is assisting us in mitigating market pressures and positions us for further growth,” he said.

The board of directors have endorsed an interim dividend of $650 million to be approved by shareholders during the second half of the year and reiterated its commitment to pay $1.3 billion in dividends for 2023.

Key Highlights

The second-quarter revenue increased by 2.5% quarter-on-quarter, to reach $1.4 billion, and declined on a year-on-year basis. Borouge reported net income of $231 million in Q2 of 2023, increasing by 16% compared to the first quarter, supported by a 4% increase in sales, but decreased compared to Q2 2022. 

Borouge also delivered a healthy EBITDA margin of 37%, up 10% compared to the previous quarter, reflecting improved operational efficiencies. Cash conversion was very strong at 96%, with a healthy adjusted operating free cash flow of $496 million, up 31% compared to the previous quarter.

As far as the performance for H1 of 2023, sales volumes grew by 1.5% year-on-year to 2.4 million metric tonnes. Net profit for the period was impacted due to a sharp 22% decline in average selling prices compared to their peak levels in Q2 of 2022, when prices were supported by a combination of high product benchmark rates and exceptional premia for PE and PP.

Value Enhancement Programme

The Value Enhancement Programme continues to successfully deliver cost efficiencies and revenue optimisation. Tracking ahead of its target of $400 million, the programme has achieved a $253 million material impact within this year. This is the result of a stringent and detailed range of operational improvement initiatives addressing fixed and variable costs.

In addition, Borouge’s cost-advantaged Olefins Conversion Unit (OCU) is operating at high utilisation, bringing a cost benefit from propylene substitution, and supporting margins. Owing to its competitive feedstock contracts, economies of scale and young asset base, Borouge is positioned in the first quartile of the global cost curve.

Borouge continues to manage a robust balance sheet and maintains a conservative leverage profile, enabling significant dividend capacity and future growth. Borouge 4, which is being built by the company’s major shareholders, ADNOC and Borealis, has reached another important milestone in completing project funding constituting of equity, shareholder loans and long-term external financing. ​​

Driving Innovation

Borouge continues to drive innovation and recently launched a new polypropylene infrastructure product to assist with the manufacturing of durable, corrosion-free plumbing and heating pipe systems.

With a longer lifetime and easy installation process, the product provides several sustainability benefits and differentiates the Company’s overall PP product portfolio. The new solution is expected to add significant value to Borouge’s hot and cold-water pipe offering, aiming to grow its market share of the segment to over 20%, the company said in a statement.