Abu Dhabi’s Borouge announces $400m cost savings plan; Q4 profit falls

DUBAI, Feb 2 (Reuters) – Abu Dhabi’s Borouge on Thursday announced a $400 million cost-saving plan to combat inflation and supply chain disruptions, the company reported, as polyethylene and poly Propylene prices compressed, and profits fell 17% in the fourth quarter.

The petrochemical company said in a statement that the plan was launched to “address current market challenges and maintain its competitive position,” adding that its core markets of Asia-Pacific and the Middle East remained stronger than developed markets.

The polyolefins producer said the benefits of its plans should be mostly felt in the second half of the year, offsetting expected market pressures, and expected a recent shift in China’s COVID policy to stimulate demand, but that would take some time to bear fruit.

“We’re going to look at all the levers,” Chief Financial Officer Jan-Martin Nufer said in an interview after the earnings report.

“We need to consider all cost areas, including logistics variable costs and conversion variable costs, but also fixed costs.”

Borouge said in a regulatory filing that it had pro forma net income of $247 million for the three months ended Dec. 31, down from $299 a year earlier.

Borouge’s board of directors has empowered its executive management to actively explore growth opportunities through international expansion, the company said in the filing.

It also reiterated its commitment to pay shareholders $975 million in post-IPO dividends in 2022, of which $325 million has already been paid, and at least $1.3 billion in 2023.

ADNOC and Austria’s Borealis own 54% and 36% of Borouge, respectively.

Reporting by Hadeel Al Sayegh; Editing by Rashmi Aich

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