Petrochemical company Borouge’s profit for the third quarter jumped 16%, reaching $328 million, thanks to higher sales and prices
Borouge Plc, a company based in the UAE, said on Tuesday that its net profit for the third quarter grew by 16% compared to the same period last year, reaching $328 million. This result was better than expected, thanks to record-high sales and strong prices for its top-quality products.
Borouge Q3 Performance
Borouge, a company listed in Abu Dhabi that makes polyolefin products, reported a 9% increase in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to $646 million for the July-September quarter. This growth was driven by a 7% rise in revenue, reaching $1.6 billion.
In a statement on Tuesday, Borouge explained that its strong performance was due to higher prices for its unique products and good relationships with customers. Even with the global market’s ups and downs, the average prices for polyethylene and polypropylene were $198 and $160 per ton above the standard prices, with these premiums growing by 14% and 50% compared to last year.
Borouge, a partnership between the Abu Dhabi National Oil Company (ADNOC) and the Austrian chemical company Borealis, is focusing more on high-value areas, such as infrastructure, which made up 38% of its sales volume in this quarter.
The Asia Pacific region is an important area for growth, with sales volumes up 5% from last year, accounting for 65% of total sales this quarter.
As of October 29, Borouge, which has a market value of $20.5 billion, achieved record production levels in the third quarter, with capacity utilization rates of 106% for polyethylene and 109% for polypropylene.
The company’s adjusted operating free cash flow for the year so far is $1.74 billion, a 20% increase from last year, with a strong cash conversion rate of 95% during this period.
Borouge is ranked 32nd on Forbes Middle East’s Top 100 Listed Companies for 2024.
Important Quote
“Our strong profits come from top-notch technology, innovation, and excellent operations, allowing us to provide unique products to a growing number of industrial customers,” said CEO Hazeem Sultan Al Suwaidi in the statement.
“The third quarter had record production and our highest sales ever. Moving forward, we are speeding up our growth by increasing our production capacity.”
Expansion Projects
In the UAE, the Borouge 4 expansion project is progressing quickly, with 80% of the construction finished. This expansion will increase production capacity by 28% and make Al Ruwais Industrial City the largest single-site facility for polyolefins in the world.
Once it’s fully operational, the project is expected to bring in an extra $1.5 to $1.9 billion in revenue each year. After completion, ownership of Borouge 4 will shift from ADNOC and Borealis to Borouge.
Borouge is also working on a study to see if a new specialty polyolefins plant in China is feasible. This project, in partnership with Wanrong New Material (Fujian), part of Wanhua Chemicals, will build a modern facility in Fuzhou that can produce 1.6 million tons per year.
Additionally, Borouge is upgrading its second ethylene unit (EU2) to increase olefins and polyolefins production by 230,000 tons. This upgrade is expected to be completed by 2028 and should add between $220 and $250 million to annual revenue.
The company also holds a large portfolio of over 1,200 active patents.
Dividend Payment
In September, Borouge paid out a cash dividend of $650 million for the first half of 2024. The company also confirmed it will pay another $650 million as the final dividend for 2024 in March 2025. This brings the total dividend for the year to $1.3 billion.
Interesting Fact
Borouge’s important product, Borlink LS4201S, is made for high-voltage cables that help support renewable energy projects around the world. It recently won the prestigious Ringier Technology Innovation Award in China.
Published: 29th October 2024
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