Borouge Plc has announced a 16% year-on-year (YoY) increase in net profit for the third quarter (Q3) of 2024, reaching $328 million, surpassing market forecasts. This growth was fueled by the company's highest-ever quarterly sales and robust pricing for its premium products. The company met strong demand from customers in rapidly growing economies by ramping up production to record levels. Adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) rose 9% YoY to $646 million in Q3, driven by a 7% increase in revenue. Borouge maintained its industry-leading profitability with an Ebitda margin of 40% for the quarter.
This strong performance was supported by higher price premiums commanded by Borouge, driven by differentiated products and strong customer relationships. Despite market volatility, the company's average polyethylene and polypropylene prices were $198 and $160 per tonne above benchmarks, with premiums increasing 14% and 50% YoY, respectively, exceeding management guidance. The company's management maintains through-the-cycle guidance of $200 per tonne for polyethylene and $140 per tonne for polypropylene.
Hazeem Sultan Al Suwaidi, CEO of Borouge, stated, "Borouge continues to excel financially and operationally, with net profit rising 16% YoY to $328 million in Q3, marking the fifth consecutive quarter of growth. Our market-leading profitability is driven by world-class technology, innovation, and operational excellence, ensuring we deliver highly differentiated products to a growing base of industrial customers. The third quarter saw record production levels and our highest-ever sales volume."
Looking ahead, Borouge is accelerating its growth through significant production capacity increases. The Borouge 4 strategic initiative is 80% complete and will significantly boost production and revenue. A feasibility study for a new specialty polyolefins plant in China is progressing well. Additionally, Borouge is investing in a comprehensive digital and AI programme to enhance productivity and innovation, aiming to generate substantial shareholder value.
Borouge remains focused on high-value segments, including infrastructure, which accounted for 38% of sales volumes in Q3. The company's commitment to operational excellence and its extensive marketing and sales network across Asia, the Middle East, and Africa reinforce its leading position in fast-growing markets. The Asia Pacific region, a key growth area, saw sales volumes increase 5% YoY, accounting for 65% of total sales volumes in Q3.
From July to September, Borouge achieved $1.6 billion in revenue, a 7% YoY increase. A strategic focus on high-value markets fueled a 2% YoY increase in sales volumes, with infrastructure solutions and other high-value segments strengthening the company's position. Borouge continued to achieve record quarterly production levels in Q3, with capacity utilisation rates of 106% for polyethylene and 109% for polypropylene, supported by asset reliability at 98%.
The company's YTD adjusted operating free cash flow of $1.74 billion represents a 20% YoY increase, supported by a high cash conversion of 95%. The balance sheet remained robust, with net debt/Ebitda at 1.3 times as of September 30th. In September, Borouge distributed its half-year 2024 interim cash dividend of $650 million, or 7.94 fils per share, following shareholder approval. The company reaffirms its commitment to pay the final 2024 dividend of $650 million in March 2025, totaling $1.3 billion for the year, representing a strong current dividend yield of 6.3%.
The Borouge 4 strategic expansion project in the UAE is 80% complete and will boost production capacity by 28%, making Al Ruwais Industrial City the world's largest integrated single-site polyolefin complex. The project, now fully energised, is on schedule. Upon completion, ownership will transfer from Adnoc and Borealis to Borouge, expected to generate an additional $1.5 to $1.9 billion in annual revenue. Internationally, Borouge is progressing on the feasibility study for a new specialty polyolefins complex in China, set to produce 1.6 million tonnes annually. Additionally, Borouge is enhancing its second ethylene unit (EU2) to increase olefin and polyolefin production by 230,000 tonnes, expected to contribute $220 to $250 million in annual revenue by 2028.
Borouge is revolutionising its approach to value creation, innovation, and productivity enhancement through AI, digitalisation, and cutting-edge technology. The company aims to generate $550 million in value by the end of 2024 through various initiatives, including health and safety, sales optimisation, sustainability, and product development. A standout achievement is the deployment of a real-time optimisation (RTO) system across three large-scale ethane crackers and 20 furnaces, processing over 150,000 parameters hourly, significantly boosting productivity and optimising energy usage.
The company's management expects a stable macroeconomic outlook in Q4 2024, with improved operating conditions driven by moderate GDP growth. Strong production and sales volumes are projected to maintain positive momentum, supported by operational efficiencies and high-value segments. Polyolefin prices are anticipated to remain relatively stable, fluctuating within a narrow range.
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