Arab News, Saturday, Feb 04, 2023 | Rajab 13, 1444
Abu Dhabi's Borouge announces $400m cost savings drive; Q4 profit drops
Emirates: Abu Dhabi's Borouge
announced a $400 million cost savings drive on Thursday to navigate inflation
and supply chain disruptions, as it reported a 17 percent decline in
fourth-quarter profit on pricing compression for polyethylene and polypropylene.
The program was introduced "in response to the
prevailing market challenges and to sustain its competitive positioning," adding
that its core markets, the Asia Pacific and the Middle East, remain stronger
than in developed markets, the petrochemicals firm said in a statement.
The polyefins producer said the benefits of its
program should mostly be felt in the second half of the year, offsetting
anticipated market pressures, and expects the recent shifts in China's COVID
policy to stimulate demand, but that would take some time to take effect.
"We will be looking at all levers," Chief
Financial Officer Jan-Martin Nufer said in a post-earnings interview.
"We will need to look at all the cost areas, into
logistics variable cost and conversion variable costs but also at the fixed
Borouge reported a net profit of $247 million in
the three months to Dec. 31 on a pro forma basis, down from $299 in the
comparable period a year earlier, it said in a regulatory filing.
Borouge's board has mandated its executive
management to actively explore growth opportunities through international
expansion, the company said in the filing.
It also reiterated its commitment to pay $975
million in post-initial public offering dividends to shareholders for 2022, of
which $325 million has already been paid, and at least $1.3 billion for 2023.
Abu Dhabi National Oil Co. and Austria's Borealis
own a 54 percent and 36 percent stake in Borouge, respectively.