Manufacturing Borouge profit down 50% as merger talks continue By Sarah Townsend July 28, 2023 Reuters/Christopher Pike Operators in the Borouge petrochemical facility at Adnoc's Ruwais complex. Talks are ongoing about Borouge merging with Austria's Borealis Falling prices hit earnings but financial position ‘robust’, says CEO Borouge completes expansion of Ruwais production facilities Owners Adnoc and Austria’s OMV in talks to merge shareholdings Petrochemicals company Borouge saw its net profit slide 53 percent year on year to $231 million in the second quarter, attributed to a decline in average sales prices for its products. The business said in a filing to Abu Dhabi Securities Exchange, where its shares are traded, that total revenues fell by 25 percent to $1.41 billion in the three months to the end of June, from $1.87 billion a year earlier. Net profit rose 16 percent on a quarterly basis, supported by a 4 percent increase in sales, while revenue grew 2.5 percent quarter on quarter. Adnoc and OMV in talks to create $30bn chemicals giant Borouge secures two new $15m contracts from UAE firms Adnoc raises bid for Covestro to $12.4bn Borouge, which also manufactures products made from polyolefin, a type of plastic used in packaging, is a joint venture of Abu Dhabi National Oil Company (Adnoc) and Austrian chemical producer Borealis. “In a challenging market environment, our results for the second quarter and first half of 2023 are a demonstration of our resilience,” Borouge CEO Hazeem Sultan Al Suwaidi said. “Following the successful completion of the planned turnaround of our Borouge 2 facility [a major expansion of the company’s production facilities in Ruwais, Abu Dhabi], our production is at a very high utilisation rate. “In addition, we continue to achieve significant efficiencies through our ambitious value enhancement programme, which is assisting us in mitigating market pressures and positions us for further growth.” Overall, the company’s financial position is “robust” with a “very strong cash conversion”, Al Suwaidi said. Borouge reported a “healthy” EBITDA margin of 37 percent for the quarter, up 10 percent compared to the previous three months, according to the filing. As a result, the board approved an interim dividend of $650 million to be approved by shareholders in the second half of this year. The company has already committed to pay $1.3 billion in dividends for 2023. Adnoc confirmed this month that formal talks are ongoing with Austria’s OMV – which owns 75 percent of Borealis – to merge the companies’ existing shareholders in Borouge and Borealis to create a combined petrochemicals holding entity. Adnoc owns the remaining 25 percent of Borealis. Adnoc owns 54 percent of Borouge, while Borealis owns 36 percent and the remaining 10 percent is held by retail and institutional investors. In its stock market filing on Friday, Borouge said of the proposed merger that “any final decision will be subject to the governance processes of Borouge and the other relevant parties involved”.