Borouge PLC announced a strong performance during the last quarter of 2023, recording a growth in net profits of 16% year-on-year to reach 1.05 billion dirhams ($288 million), bringing its total net profits over the past year to 3.6 billion dirhams. “1 billion dollars.” The company continued its strong performance momentum, achieving a 2% quarter-on-quarter increase in net profits during the last quarter of 2023. This is the third consecutive increase in the company’s quarterly profits. Borouge’s focus on improving its operational and commercial performance represents a major motivation behind Its success in achieving its strong results in light of the challenges and global market conditions.
During the last quarter, costs decreased by 16% year-on-year, while the “Value Enhancement Programme,” which focuses on improving revenues and raising the efficiency of cost management, contributed significantly to alleviating the repercussions of the decline in global prices and the decline in demand over the past year.
The ambitious “Value Enhancement Program” succeeded in achieving a positive financial impact of 2.2 billion dirhams ($607 million), exceeding its initial 2023 target of 1.5 billion dirhams ($400 million) and its revised target of 1.8 billion dirhams ($500 million). Against the backdrop of the company's resilient performance supported by high levels of liquidity and strong cash flows, Borouge's management intends to allocate a total cash dividend of 15.9 fils per share for the fiscal year 2024, which reflects achieving a strong dividend yield of 6.6%.
Hazim Sultan Al Suwaidi, CEO of Borouge, said: “Over the past 12 months, Borouge has confirmed the flexibility of its business model and its ability to overcome challenges and market conditions, in addition to achieving outstanding performance, thanks to its strong brand, advanced technical capabilities, outstanding operational performance and growing business volume.” “.
He added: “The outstanding operational performance played a pivotal role in the growth of revenues and net profits of the company, supported by the excellent results achieved through the ‘Value Enhancement Programme’, which succeeded in exceeding its set targets. Borouge will continue to focus on disciplined cost management without compromising on safety standards, and focus on “Innovating new products of advanced level and high quality, with a commitment to achieving great value for the benefit of shareholders and strategic partners.” Al-Suwaidi stressed that “Borouge” is looking to the future with an ambitious vision, and the company will continue to enhance its flexibility and ability to adapt to market changes and dynamics and meet the evolving needs of customers.
He said: “Borouge will continue to focus on developing quality products while maintaining strong price premiums across its product portfolio, along with achieving great value while continuing to work to strengthen its leading position in the market. The company is making progress in implementing its strategic project, “Borouge 4.” “Which serves as a fundamental pillar in translating the company’s growth ambitions, especially in high-growth sectors, and supports the development of sustainable solutions that meet customer needs in this field.”
Al Suwaidi pointed out that, based on its strong record in distributing profits, Borouge announces the allocation of cash dividends worth 4.8 billion dirhams ($1.3 billion) for the year 2024, which reflects its commitment to shareholders to achieve significant and sustainable value throughout the various market cycles. The company achieved during the quarter In 2023, revenues amounted to 5.5 billion dirhams ($1.5 billion), without any change compared to the previous quarter, and a decrease of 6% on an annual basis due to the decline in global demand levels compared to the previous year, while costs fell by 16% during the same period.
The company also recorded net profits of 1.05 billion dirhams ($288 million) during the last quarter of 2023, an increase of 16% year-on-year, largely due to cost reductions through the “Value Enhancement Program.”
The company achieved an increase in its net profits by 2% on a quarterly basis, which reflects the company’s strong flexibility despite the prices of polyolefin products remaining broadly unchanged. The company also recorded a strong margin in earnings before interest, taxes, depreciation and amortization of 40%, an increase of 6%. Compared to the previous year, this is due to the improvement in the efficiency of operational processes and the success of its cost reduction strategy.
The cash flow conversion rate was very strong at 88%, with adjusted cash flows from operating activities of AED 1.9 billion ($526 million), down 9% quarter-on-quarter.
During the last quarter of 2023, Borouge achieved an increase in production by 2% on an annual basis, and was also able to reduce production costs by 17% per ton on an annual basis. During the fiscal year 2023, Borouge recorded revenues worth 21.3 billion. AED 5.8 billion and adjusted earnings before interest, taxes, depreciation and amortization of AED 8 billion ($2.2 billion).
Thanks to the successful implementation of the value enhancement program, costs decreased last year by 12%, while the company’s net profit stabilized at 3.7 billion dirhams ($1 billion), affected by the noticeable decrease in average selling prices by 16% against the backdrop of a decrease in global demand for polyolefin products. Compared to the exceptionally high levels in 2022, it was partially compensated by the growth of additional sales volume by 1% to reach 5.1 million tons. The distinguished operational results were reflected positively in improving the company’s performance throughout the past year, as Borouge achieved high productivity rates of 101% in Polyethylene production and 97% in polypropylene production, representing a significant increase compared to 2022 levels.
High-value solutions allocated to the infrastructure sector accounted for 39% of the company’s total sales volume during the year 2023, highlighting the company’s leading position in key growth markets. Borouge, which operates advanced manufacturing facilities in the Ruwais Industrial Complex, has achieved one of the largest integrated complexes for production Polyolefin in the world, high production rates during the last quarter of 2023 amounted to 112% in polyethylene production and 99% in polypropylene production. This contributed to an increase in total production volume by 6% during the year 2023, despite the cessation of operations as a result of the successful comprehensive periodic maintenance planned at Borouge Factory 2. Borouge’s value enhancement program played a pivotal role in enabling the company to record strong growth in its revenues and net profits during the last quarter. And the entire last year.
This strategic program has exceeded its desired goal, achieving a positive financial impact of 2.2 billion dirhams ($607 million), exceeding its initial target that was set at the beginning of the year 2023 at a value of 1.5 billion dirhams ($400 million), as well as its revised target that was set in the third quarter of 2023. With a value of 1.8 billion dirhams ($500 million). As a result, Borouge continues to have high flexibility that enables it to overcome changing market conditions. Borouge continues to move forward towards increasing its polyethylene production capacity, through the “Borouge 4” project of ADNOC and Borealis. “Which is expected to be completed by the year 2025, as it will enhance the company’s production capacity by 1.4 million tons annually, bringing the total capacity to 6.4 million tons.
This strategic project constitutes a major focus of the company's strategy aimed at achieving sustainable growth, and will also support its growing product portfolio. Borouge continues its efforts to explore opportunities for expansion and growth in the international market, in implementation of the directives of its Board of Directors. In line with Borouge’s commitment to achieving the highest levels of operational excellence, Borouge Factory 3, in addition to its associated raw materials supply operations, will undergo planned comprehensive maintenance work. In 2024. Maintenance work will temporarily affect the company’s production volume by about 500 kilotons during the year 2024. Sustainability is a major pillar within the strategic goals agenda adopted by Borouge, and in this regard, the company has signed five agreements in the markets it serves, with the aim of expanding the scope of Its network includes supporting the infrastructure dedicated to recycling and the circular economy system, in addition to investing in innovation in order to develop its solutions and products and enhance its ability to meet the constantly evolving economic and sustainable needs of its customers.
Over the past year, Borouge has launched a group of innovative products, including solutions that support the circular economy within its portfolio of sustainable packaging products, in addition to new solutions in the field of infrastructure and advanced packaging, with the aim of benefiting from the growing demand for these high-growth sectors. .
It is worth noting that Borouge’s distinguished products are widely used in the sectors of renewable energy infrastructure, sustainable mobility, agriculture, and advanced packaging, providing a tangible impact that reflects positively on societies and a variety of sectors and industries. Borouge will continue to focus its sales on high-growth regions and markets. As well as high-value sectors including infrastructure and related industries.
Borouge management renewed its expectations regarding price premiums across market cycles, supported by its position in the first quarter of the cost curve, the large scale of its operations through one of the largest integrated polyolefin production complexes in the world, in addition to its innovative technology Borealis Borstar® and its competitive capabilities in key high-growth markets as well as High value sectors.
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