Borouge second-quarter net profit surges 35% on higher revenue

Revenue in the second quarter increased an annual 18 per cent to $1.87bn

Borouge reported strong half-year results after its record listing on the Abu Dhabi Securities Exchange. Photo: Borouge
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Borouge, the joint venture between Adnoc and Austrian chemicals producer Borealis, said second-quarter net profit surged about 35 per cent from the year earlier period on higher revenue.

Net profit for the three-month period to the end of June climbed to $490 million from the same period a year earlier, the company said in its first earnings filing on Thursday since its listing on the Abu Dhabi Securities Exchange last month.

Revenue in the second quarter increased an annual 18 per cent to $1.87 billion, while adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) grew by 35.5 per cent compared to the prior quarter. This was achieved despite higher underlying feedstock prices as the company said it was able to optimise feedstock arrangements to lower overall production costs per tonne compared with the previous quarter.

Borouge reported a 16.4 per cent rise in revenue to nearly $3.5bn in the first six months of the year, versus the same period last year, as sales volume grew nearly 9 per cent and it registered an average price per tonne growth of 4.1 per cent. Adjusted Ebitda increased 1.7 per cent to $1.5bn and net income increased about 2.5 per cent to $853m.

Borouge reiterated its commitment to pay $975 million in dividends to shareholders for the 2022 fiscal year, and at least $1.3bn for fiscal year 2023.

“Borouge has delivered double digit revenue growth in its maiden half-year results as a listed company, demonstrating exceptional financial performance and commercial resilience. These impressive results follow on from the company’s record-breaking initial public offering," said Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, Adnoc managing director and group chief executive, and chairman of Borouge.

“Borouge is central to the delivery of Adnoc’s ambitious downstream and industrial growth strategy and is poised for robust future growth, benefiting from the global boom in the petrochemicals sector. Adnoc, alongside its long-standing partner Borealis, will remain a committed, long-term majority shareholder in Borouge as the company continues on its exciting growth trajectory while delivering exceptional value and superior shareholder returns.”

The company successfully raised $2bn from what was the biggest share sale on the ADX that was about 42 times oversubscribed. The company's shares started to trade on the exchange in June and it has a mark value of more than $23bn as of Thursday 7.54am UAE time. The company was added to the FTSE Russell’s FTSE Global Equity Index Series following its listing.

Borouge is the fourth Adnoc subsidiary that listed on the second-biggest Arab stock market. Adnoc owns 54 per cent of the company after the listing, while Borealis controls 36 per cent.

Established in 1998, Borouge is a petrochemical company that employs more than 3,100 people and serves customers in more than 50 countries across Asia, the Middle East and Africa. It provides polyolefin solutions for the agricultural, infrastructure, energy, advanced packaging, mobility and healthcare industries.

Its portfolio of products includes polythene and polypropylene — the two most common forms of polymer — which are used in a variety of products such as pipes, fittings, wires and cables, and also have automotive, sustainable packaging, agricultural and medical applications.

Borouge's overall production capacity grew an annual 6.9 per cent in the first half of the year as the ramp-up of the new PP5 plant and the turnaround of Borouge 1 in Q1 were completed, helping boost overall sales volumes 8.6 per cent. June 2022 saw the strongest ever sales volumes achieved in a single month with an increasing proportion of products sold into the infrastructure solutions market, the company said.

Borouge generated significant cashflow in the first half of the year with a cashflow conversion at 94 per cent "reflecting its underlying higher profitability and lower capital expenditure", the company said.

"We have delivered significant sales volumes growth during the first half of 2022 and continue to achieve strong premia above benchmark pricing, reflecting our value-added, differentiated products and innovative solutions that have a positive impact on society," said Hazeem Al Suwaidi, chief executive of Borouge.

Premia for polypropylene in the first half of 2022 was $283 a tonne compared with $262 a tonne in the same period last year, and for polyethylene was $368 a tonne compared with $264 a tonne in the first half of 2021.

"We are very optimistic regarding the future growth of the company, and we remain committed to delivering exceptional value and returning an attractive dividend to our shareholders.”

Updated: July 28, 2022, 5:43 AM