Abu Dhabi petrochemical company Borouge Plc. defied expectations by reporting a significant increase in net profits for the first quarter of 2024. The company's profits rose 37% year-on-year to $273 million, exceeding analyst estimates of $190 million. This positive outcome came despite a 6% decline in revenue during the same period, which stood at $1.30 billion.
Borouge's success in boosting profits can be attributed to its focus on cost reduction strategies. The company managed to decrease its overall cost base by a substantial 20% compared to the previous year, reaching $739 million. This improvement reflects a 18% reduction from the prior quarter as well.
While revenue dipped due to a 16% drop in sales volume caused by feedstock-related operational adjustments, Borouge was able to counter this decline through strategic pricing. The company reported a 4% increase in average sales prices for polyethylene and a 6% rise for polypropylene, exceeding the global benchmark rise of 1% for both products.
Borouge's commitment to shareholder returns remains strong, with the company reiterating its pledge to distribute a dividend of $1.3 billion in 2024. This commitment translates to a current dividend yield of 6.5%.
Looking ahead, Borouge is optimistic about its future prospects. The company is actively expanding its polyethylene production capabilities, with the construction of its Borouge 4 facility exceeding 60% completion. This new plant is expected to significantly increase Borouge's annual capacity by 28%, solidifying its position as the operator of the world's largest integrated single-site polyolefin complex at Al Ruwais.
Borouge Plc. delivered a robust financial performance in the first quarter of 2024, exceeding profit expectations through effective cost management and strategic pricing. The company's ongoing investment in production capacity expansion positions it for continued growth in the petrochemicals market.