Borouge posts first-quarter revenue of $1.38bn

The company completed the planned turnaround of its Borouge 2 facility

Borouge Petrochemical Complex in Al Ruways Industrial City. Photo: Borouge

Borouge, the joint venture between Adnoc and Austrian chemicals producer Borealis, on Friday reported a first-quarter revenue of $1.38 billion.

Net profit attributable to shareholders of the company for the three-month period that ended in March stood at $198 million, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

“We are pleased to report our Q1 2023 results, along with a number of important operational and strategic achievements,” said Hazeem Al Suwaidi, chief executive of Borouge.

“The turnaround of our Borouge 2 facility was successfully completed on time and on budget, returning our asset base to full production capacity from the second quarter onwards,” said Mr Al Suwaidi.

The turnaround has returned 200,000 tonnes to the company's total production capacity in the current quarter, it said.

Borouge's sales volume rose 5.1 per cent to about 1.16 million tonnes in the third quarter from the same period a year earlier.

The company, which was listed on the ADX last year, also said it is “committed” to paying $1.3 billion in dividends for 2023.

Polypropylene, Borouge's main product, is a thermoplastic material used in products including plastic packaging, car parts and textiles.

The global polypropylene market is projected to hit $167 billion by 2029, from about $121 billion in 2021, registering a compound annual growth rate of 4.2 per cent during the forecast period of 2022-2029, according to Data Bridge Market Research.

Borouge, which is experiencing strong growth in core markets such as Asia and the Middle East, is also looking at more “international growth opportunities”, Rainer Hoefling, chief executive of Borouge Pte Ltd, told The National in an interview.

“We got a mandate from our owners to look into international growth opportunities, which needs to be value accretive [and] needs to fit in our overall strategy in the regions we are [present],” said Mr Hoefling.

This could include building an asset base in some markets and accelerating product diversification, he said.

A recovery in economic activity in China, the world's manufacturing hub, is expected to tighten the demand for plastics and petrochemicals this year.

The country, which is gradually reopening its economy after adhering to a strict zero-Covid policy for nearly three years, has set a modest GDP growth target of 5 per cent for this year.

“China is the biggest polyolefin market in the world … so if you grow it 5 per cent, this is substantial,” said Mr Hoefling.

China's reopening earlier this year “stimulated” demand in the country and all over South- East Asia, thanks to strong trade links, Mr Hoefling said.

“People [in China] have started consuming again but what they don't do yet is … buy houses [or] expensive cars. They are a little bit cautious.”

China's exports will take longer to recover as Europe and the US experience an economic slowdown, he added.

In February, Borouge announced a value enhancement programme aimed at cutting costs and boosting operational efficiency. It is expected to add $400 million to the company’s earnings before interest, taxes, depreciation and amortisation this year.

The company has already achieved costs savings of about $100 million in the first quarter, Mr Hoefling said.