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Borouge reports Q4 2023 net profit increase of 16% YoY, bringing full-year net profit to $1 billion

Management intends to distribute 15.9 fils per share in dividends for the full year 2024

Borouge Plc has reported a 16 per cent year-on-year (YoY) increase in net profit in the fourth quarter of 2023 to $288 million, bringing full-year net profit to $1 billion.

The company maintained its performance trajectory, with fourth-quarter net profit increasing 2 per cent quarter-on-quarter, marking a third consecutive increase in quarterly earnings.

Borouge’s focus on operational and commercial excellence is driving strong performance in the face of challenging global market conditions. Costs in the fourth quarter were 16 per cent lower year-on-year. The Company’s Value Enhancement Programme has achieved a positive impact of $607 million, surpassing both its initial 2023 target of $400 million and the later revised target of $500 million.

On the back of the company’s resilient performance, high cash generation and robust liquidity position, Borouge management intends to distribute 15.9 fils per share in dividends for the full year 2024, equating to a 6.6 per cent current dividend yield.

Hazeem Sultan Al Suwaidi, chief executive officer of Borouge, said: “Over the past twelve months, we have demonstrated the resilience of our business model and ability to leverage our strong brand positioning, technical capabilities, operational scale and excellence to outperform in challenging market conditions.

Operational efficiencies played a significant role in driving bottom line performance with our value enhancement programme delivering beyond its set targets. We maintained a clear focus on cost discipline with zero compromise on safety, outstanding product innovation, quality and our commitment to the value we provide to our stakeholders.

“Looking ahead, Borouge will remain agile in adapting to market dynamics and our customers’ evolving needs. Our focus centres on differentiated product development, maintaining our price premia across our products, and continuing to drive further value creation as we solidify our market-leading positions.”

He added that the strategic Borouge 4 project is progressing well and will be pivotal to delivering on the Company’s growth aspirations, particularly in high-growth segments and developing sustainable solutions that cater to customers’ evolving needs. “Building on our strong dividend track record, we are pleased to announce our intention to distribute $1.3 billion in cash dividends for 2024, highlighting our dedication to deliver shareholder value through the cycle,” he noted.

Highlights for the three months ended December 31 2023

Fourth quarter revenue reached $1.5 billion, unchanged quarter-on-quarter and declining 6 per cent on a year-on-year basis on weaker global demand, while costs reduced 16 per cent over the same period. Net profit of $288 million in the quarter increased 16 per cent year-on-year, supported by significant contributions from the Value Enhancement Programme.

Net profit increased by 2 per cent quarter-on-quarter, reflecting the Company’s resilience despite global polyolefins pricing remaining broadly flat.

Moreover, Borouge delivered a healthy Ebitda margin of 40 per cent, up 6 percentage points compared to the previous year, owing to the Company’s improved operational efficiencies and cost optimisation strategies.

Cash conversion was high at 88 per cent, with a healthy adjusted operating free cash flow of $526 million, down 9 percentage points quarter-on-quarter.

Production in the quarter was 2 per cent higher year-on-year, while the Company reduced the cost per tonne produced by 17 per cent year-on-year.

Highlights for the 12 months ended 31 December 2023

For the full 2023 financial year 2023, the Company reported revenue of $5.8 billion and adjusted Ebitda of $2.2 billion. Enabled by the very successful execution of the Company’s Value Enhancement Programme, full-year costs were 12 per cent lower.

Net profit for the year stood at $1 billion, impacted by a 16 per cent decline in average selling prices as global polyolefins demand reduced from peak levels in 2022, which was partially offset by a 1 per cent increase in sales volume to 5.1 million tonnes.

Operational excellence played a central role in Borouge’s resilient performance, with the Company achieving high utilisation rates of 101 per cent for polyethylene (PE) and 97 per cent for polypropylene (PP), a significant increase from 2022 levels.

The high-value infrastructure solutions segment represented 39 per cent of total sales in 2023, highlighting Borouge’s strong positioning in this key growth market.

Operational excellence continues to drive exceptional production volumes

Borouge operates state-of-the-art manufacturing facilities in Al Ruwais, one of the world’s largest integrated polyolefin complexes. The Company achieved outstanding production utilisation rates in 2023, with fourth-quarter PE production reaching 112 per cent and PP production at 99 per cent. This contributed to the total production volume increasing by 6 per cent in 2023, despite the successful Borouge 2 plant turnaround impact.

Value creation supported by strategic capacity growth projects, continuous operational investments and the pursuit of international expansion opportunities

The Company is actively advancing its polyethylene production capabilities with the ongoing Borouge 4 project under the ownership of ADNOC and Borealis. The facility is expected to be completed in 2025 and is set to expand Borouge’s capacity by 1.4 million tonnes annually to a full production capacity of 6.4 million tonnes.

This strategic project is pivotal to Borouge’s strategy to achieve sustained growth and will support the delivery of its growing product portfolio. Borouge also continues to explore international expansion opportunities as mandated by its Board of Directors.

The Borouge 3 plant and associated feedstock operations are scheduled for a planned maintenance shutdown in 2024. This will impact annual volume by an estimated 500 kilo tonnes in 2024.