Borouge, a leading petrochemicals company that provides innovative and differentiated polyolefins solutions, has delivered robust Q3 2023 performance, reporting a net profit of $282 million (AED1.04 billion) for the quarter ended September 30, marking a 22 per cent increase over the previous quarter.

Strong production performance, targeted cost management and revenue optimisation from its ambitious Value Enhancement Programme helped Borouge display resilience in the face of a subdued global environment and challenging polyolefins market.

Borouge’s Value Enhancement Programme delivered a $420 million positive impact in the first nine months of 2023, surpassing its ambitious target of $400 million set for the 2023 financial year.

Hazeem Sultan Al Suwaidi, Chief Executive Officer of Borouge, commented: “Borouge has delivered robust operating and financial performance this quarter, leveraging the company’s competitive advantages and maintaining disciplined cost management. Consequently, sales volumes have grown, and we remain committed to innovation to expand market share and maintain strong pricing premia. We are pleased to announce that we have exceeded the target of our ambitious Value Enhancement Programme and as a result, we have committed to pursuing a higher target to further mitigate the current challenging market environment. The company is proving its resilience amid tough global conditions and is well placed to deliver further growth as the market cycle turns. Borouge has distributed an interim dividend of $650 million in the third quarter.”

In line with previous market communication, the company has committed a dividend of $1.3 billion (15.9 fils per share) for the 2023 financial year, which equates to 6.3% current dividend yield.

Borouge achieved very high production utilisation rates with PE production at 104% and PP production at 109% for during the quarter that contributed to sales volumes of 1,395 kilo tonnes in the third quarter, representing a 16% quarter-on-quarter and 4% year-on-year increase. These higher volumes partially mitigated the impact of a 14% decline in average polyolefin selling prices during the period.

Borouge’s Value Enhancement Programme continues to successfully deliver cost efficiencies and revenue optimisation. Already exceeding its target of $400 million, the programme has delivered a $420 million positive impact year-to-date in 2023. The company is now pursuing a higher target of $500 million for the Programme to mitigate the steep price decline in the current challenging market environment. The programme is one of the industry’s most ambitious revenue enhancement and cost saving programmes, delivering a considerable positive impact to the bottom line in a challenging environment and positioning Borouge as a leader among its regional and international peers.

Outlook

The overall polyolefins market remains challenging, with pricing expected to operate within a narrow band of volatility throughout the fourth quarter of 2023. Borouge remains well-positioned to deliver product premia versus benchmarks through-the-cycle given the company’s competitive and cost-advantaged feedstock position, economies of scale through one of the world’s largest integrated polyolefins complexes, superior Borealis Borstar® proprietary technology and the company’s leading position in key growing and sustainable market segments. Borouge’s management expects to deliver further gains from the Value Enhancement Programme in the fourth quarter of 2023.