Media ININ Economy We Trust
Borouge announced a revenue growth of 8.2% in 2022 to reach $6.7 billion (24.5 billion dirhams), thanks to a growth in total sales of polyolefins during this period by 14.9%. The year witnessed a growth in the total production capacity by 10% on an annual basis, after the completion of the operation of the fifth unit for the production of polypropylene of Borouge in full, which led to supporting distinguished production by providing an additional production capacity of 500 kilotons annually and providing more diverse and quality varieties of Product mix and excellent product manufacturing support.
Adjusted EBITDA for the full year was $2.6 billion (9.5 billion dirhams), down 2.9%. Net profit for the year amounted to $1.4 billion (5.1 billion dirhams), down by 7.2%, in line with market expectations and holding up well despite the generally challenging market environment.
10% growth in production capacity after operating the fifth unit
Annual net profit down 7.2%
Building on Borouge’s efforts to reduce costs in 2022, it announced the launch of a high-impact program to enhance value and generate savings, through effective initiatives to reduce costs and improve revenues. The program focuses on enhancing efficiencies in reducing variable and fixed costs, and improving revenue growth opportunities, and this is expected to contribute to a positive impact of $400 million in EBITDA in 2023. Thereafter, Borouge management expects to maintain the positive impact. For EBITDA of 15% from 2024, compared to total costs for 2022, the program aims to offset market pressures and help the company secure future growth.
Based on its high competitiveness, strong financial position and long-term strategy for sustainable growth, the Borouge Board of Directors has authorized its executive management to explore new growth opportunities through international expansion. The focus for expansion will be on geographic regions and markets that support the company’s current strategic priorities, and expansion opportunities will be explored within the framework of Borouge’s disciplined capital allocation policy.
Flexibility and efficiency
Hazeem Sultan Al Suwaidi, CEO of Borouge, said: “We are pleased to announce our strong financial results for the twelve months ending on December 31, 2022, which reflect the flexibility and efficiency of our business and confirm our ability to achieve strong growth in sales and revenues despite market challenges. As we look forward to 2023 and the coming years, we affirm our commitment to continuing growth and exploring new opportunities for expansion in the UAE and internationally, which enhances our long-term growth strategy and our position as a leading global producer of polyolefins.”
He added: “Our operations are characterized by high quality and scale on a global level, and this is evidenced by very strong production volumes, and we are keen to diversify our products more than ever, and we are working to support price premiums and enhance our competitive position. We also expect that demand in our core regions will continue to outperform demand in global markets, and we will move forward with our strategy to innovate and provide new products to customers while carefully planning to provide appropriate production volumes to meet changing demand.”
The most prominent achievements of 2022
Revenue was $1.6 billion with pricing pressures in place, which was partially offset by very strong sales volumes. The total sales volume during this period increased by 23.8% year-on-year to 1,415 kilotons, an increase of 5.5% compared to the previous quarter. Borouge maintains its premium pricing trends throughout the cycle, which is a key competitive advantage for the company despite some pressures it faced on a quarterly basis, which represents a challenge on an industry level in light of the current market conditions. Borouge achieved adjusted EBITDA of $541 million in the fourth quarter of last year, and it remained flat year-on-year. Net profit for the period was $247 million, in line with market expectations.
Costs improved relatively during the fourth quarter, as freight costs decreased from their very high levels, and this is expected to contribute to improving margins. The company expects this trend to continue as it implements a value enhancement program that aims to further reduce fixed and variable costs, as well as improve revenues. In addition, the Olefins Conversion Unit (“OCU”) of Borouge plays an important role in reducing the cost of raw materials by obtaining it from internal sources of raw propylene rather than external ones. It will also continue to operate this unit at its maximum production capacity to enhance the profit margin. The company continues to operate comfortably within the top quartile of the global cost curve, due to competitive feedstock contracts, economies of scale and the availability of a modern asset portfolio.
