Borouge (BOROUGE) Q4 2023 earnings summary

Executive summary

• FY 2023 sales volumes rose 0.6% to 5,116 kt; the Value Enhancement Programme delivered $607 million in savings and revenue optimisation, exceeding its $500 million revised target.

• Q4 net profit and adjusted EBITDA rose YoY despite lower average selling prices; FY revenue, net profit and adjusted EBITDA declined amid weaker market conditions.

Financial highlights

• FY revenue was $5,791 million, down 14% YoY; net profit was $1,001 million, down 29%.

• FY adjusted EBITDA was $2,171 million, down 18% YoY; Q4 adjusted EBITDA was $600 million, up 11% YoY.

• Q4 revenue was $1,497 million, down 6% YoY; Q4 net profit was $288 million, up 16% YoY and 2% QoQ despite a 3% YoY decline in average selling prices.

• FY adjusted operating free cash flow was $1,972 million, down 20% YoY; Q4 was $526 million, up 13% YoY.

• FY average selling prices fell 16%; Q4 costs declined 16% YoY and FY costs declined 12% YoY.

Outlook and guidance

• Q1 2024 PE and PP pricing was expected slightly above Q4 2023; over-cycle premia guidance remained ~$200/t for PE and ~$140/t for PP.

• Planned 2024 maintenance at Borouge 3 and associated feedstock operations is expected to reduce production volumes by 500 kt: 170 kt in Q1 and 330 kt in Q4.

• Sales focus remains on high-growth geographies and high-value segments, including infrastructure and adjacent industries; ethane costs are expected to remain essentially fixed under a long-term supply and pricing agreement.