Megaproject

Gulf Oil and Gas

Borouge Q1 2025 Net Profit Increases To $281 MillionBorouge Plc, a leading petrochemicals company providing innovative and differentiated polyolefins solutions, has reported a substantial $281 million net profit for the first quarter driven by record monthly production in March, an increase in sales volumes and continuous cost discipline. Q1 2025 operational performance remained strong, with production volumes rising 7% year-on-year in the first quarter of 2025. Overall asset reliability remained strong, achieving 94.4% by the end of the quarter, with polyethylene and polypropylene utilisation rates at 101% and 98% respectively, underscoring the company’s operational excellence and efficiency. Demand for high-value product segments were robust in the core growth markets of Asia Pacific, the Middle East, and Africa. Total sales volumes increased 10% year-on-year in the first quarter to 1.25 million tonnes, driven by substantial growth of 8% in polyethylene and 13% in polypropylene sales volumes. Borouge’s differentiated and high-quality materials continued to attract premium pricing, with prices for polyethylene and polypropylene averaging $224 and $154 well above the company’s through-the-cycle guidance, respectively. The premia reflects the significant pricing uplift of Borouge’s differentiated products, which support key growth sectors including infrastructure, energy, agriculture, advanced packaging, and healthcare. Hazeem Sultan Al Suwaidi, Chief Executive Officer of Borouge, commented: “Borouge is firmly positioned on an accelerated growth trajectory having demonstrated remarkable resilience and operational excellence over the past couple of years. This gives us strong confidence as we enter a new phase of transformational growth with Borouge Group International. A core focus of our strategy remains on delivering superior value to our shareholders, demonstrated by Borouge’s intention to further increase our dividend to 16.2 fils per share for 2025 - which will also serve as the intended minimum share payout up to 2030 under Borouge Group International.” The company’s continued strong performance lays firm foundations for the proposed combination of Borouge and Borealis, and the acquisition of Nova Chemicals, to create Borouge Group International, a $60 billion global petrochemicals leader. The new entity has been designed to deliver consistently strong dividends and significant near-term growth, with the transactions scheduled for completion in Q1 2026, subject to legal and regulatory approvals. Targeted growth in high-value product segments driving pricing strength Revenue in Q1 2025 grew 9% year-on-year to $1.42 billion, driven by higher average selling prices and increased sales volumes. The strong performance reflects the growing demand for the company’s differentiated energy and infrastructure solutions, which contributed 38% of total sales volumes during the quarter. Average sales prices for polyethylene and polypropylene each rose 2% quarter-on-quarter. Cost discipline remained a key focus, with sales and distribution expenses reduced by 6% year-on-year. The company’s rigorous cost management builds on its successful Value Enhancement Programme, delivering a $607 million benefit in 2023, contributing to an industry-leading EBITDA margin of 40% in the first quarter. Adjusted EBITDA for the first quarter stood at $564 million, broadly stable year-on-year. Cash conversion remained robust at 93%, while adjusted operating free cash flow reached a solid $523 million, demonstrating the company’s continued focus on operational efficiency and cash generation. The balance sheet remains very solid, with the net debt/EBITDA ratio at 0.9 times as of 31 March 2025. Shareholders receive substantial dividend for 2024, with intention for attractive dividend uplift from 2025. Borouge executes share buyback plan approved at its AGM Following the company’s 2025 Annual General Meeting (AGM) on 7 April, shareholders approved a final dividend of $650 million for 2024 which was paid on 28 April 2025, bringing the total 2024 dividend payout to $1.3 billion - equivalent to 15.88 fils per share. This brings the total dividend distributed to shareholders since the company’s IPO in 2022 to a significant $3.58 billion. At the company’s AGM, Chairman of Borouge, His Excellency Dr. Sultan Al Jaber, reinforced the company’s commitment to delivering substantial and sustainable shareholder returns. In 2025 Borouge intends to increase its dividend to at least 16.2 fils per share. Upon completion of the transaction, Borouge Group International intends to offer a highly attractive estimated total dividend of $2.2 billion per year, equivalent to a minimum of 16.2 fils per share annually, for the period from 2026 to 2030, representing a 6.3% 1 annual yield at the current share price. Borouge and Borouge Group International dividends represent a 38% 1 cumulative dividend return through to 2030. Borouge has also initiated a share buyback of up to 2.5% of outstanding shares, approved at its AGM. The company has purchased 64 million shares to date with transactions reported as per Abu Dhabi Exchange (ADX) regulatory requirements. Driving innovation through AI, digitalisation and technology Borouge is leveraging the power of artificial intelligence, advanced technologies, and digital transformation to accelerate innovation, enhance operational efficiency, and advance its sustainability goals. In 2024, Borouge generated $573 million in value through its AI-led digital and technology programmes, exceeding its target, and has set a 2025 target of a further $575 million in AI, digitalisation and technology generated savings to maximise value for shareholders. Accelerating product innovation Borouge continues to expand its portfolio of advanced polyolefin solutions across key sectors including agriculture, energy, healthcare, infrastructure, mobility, and packaging. The company is advancing product innovation to meet rising global demand, with several new solutions set for launch in 2025. Borouge, in partnership with Borealis, launched its first UAE-manufactured healthcare solution, Bormed RG868MO, designed for syringe applications. The company is now preparing to release a second healthcare product in 2025, further expanding its specialised medical portfolio. In infrastructure, Borouge has enhanced its PE100-RC materials, delivering superior mechanical resistance and long-term durability for pressure pipe systems. The company also unveiled a new HDPE grade at Arabplast for mid-to-large-sized containers, up to 100 litres, designed to replace heavier materials like metal. This supports lightweighting and contributes to lower CO2 emissions, reinforcing Borouge’s commitment to delivering high-performance, sustainable solutions. Advancing sustainability and earning industry recognition The company’s innovative, durable, and sustainable product solutions are helping customers across key industries reduce waste, lower emissions, and extend the lifecycle of critical infrastructure, reinforcing Borouge’s commitment to delivering positive environmental and societal impact while meeting growing global demand. In parallel, Borouge is strengthening its own sustainability practices and disclosures. In 2024, the company reported to the Carbon Disclosure Project (CDP) for the first time, earning a transparency badge in recognition of its commitment to climate-related disclosure. In March Borouge published its 2024 Sustainability Report, reflecting best-in-class transparency fully aligned with leading global reporting frameworks. Borouge’s sustainability leadership was further recognised with the prestigious Middle East Oil & Gas Sustainability Award for Best Project. Borouge Group International positioned to unlock significant shareholder value ADNOC and OMV, as the main shareholders in Borouge Group International, have announced their intention, post-closing of the transaction, to offer an attractive estimated total dividend of $2.2 billion, equivalent to a minimum of 16.2 fils per share dividend, annually from 2026 to 2030 based on an intended 90% net income payout ratio. The dividend will be supported by a strong balance sheet, resilient profitability, and substantial free cash flow generation. Cash earnings per share at Borouge Group International are expected to grow up to 30% over the next three to five years, with EBITDA projected to rise to $7 billion. Importantly for the increase in EBITDA, the majority of near-term expansion projects have already been funded and are nearing completion. The Borouge 4 mega project would be transferred to Borouge Group International at cost, unlocking substantial value for shareholders. Once fully operational, the plant will add 1.4 million tonnes per annum of additional capacity and is expected to contribute approximately $900 million in annual EBITDA through a typical business cycle. Borouge remains focused on optimising its high-value product mix and regional sales strategy to sustain strong price premia. The company’s agility in reallocating volumes to markets offering higher netbacks continues to underpin its successful revenue optimisation efforts. While the planned Borouge 3 turnaround in the second quarter is expected to impact production by approximately 320 kilotonnes, these planned, regular five-year maintenance turnarounds are essential towards servicing Borouge’s world-class assets and operational excellence, supporting high utilisation rates and production volumes. Borouge is also closely monitoring tariff developments and is positioning itself to support its customers in key markets. The management remains confident in the company’s ability to deliver outperformance and maintain a competitive edge, even amid market volatility.

oil-gas

Apr 30, 2025

Gulf Oil and Gas

Lg Innotek To Build Fc-Bga Into 700 Million Usd Business By 2030LG unveiled the Dream Factory, a hub for the production of FC-BGAs (Flip Chip Ball Grid Arrays), the company's next-generation growth engine, to the media for the first time and announced it on the 30th April. In 2022, LG Innotek announced its plans to launch a business producing FC-BGAs, high-value semiconductor substrates. To build the Dream Factory, the company acquired LG Electronics' Gumi 4 Factory and began full-scale mass production in February 2024. The Dream Factory, spanning a total area of 26,000 square meters, is regarded as the industry's most advanced "smart" factory, integrating the latest IT technologies, including artificial intelligence, deep learning, robotics, and digital twin technologies. By applying automation, information, and intelligence technologies to the entire process, it has established a cutting-edge FC-BGA production infrastructure that eliminates the four major factors known to undermine production competitiveness: human error (Man), failure cost (F-cost), breakdown maintenance (BM) loss, and accidents. "Elimination of defects caused by human contact" through automation of all processes and logistics using robots For semiconductor substrate products such as FC-BGAs, which require a highly demanding ultra-fine process, even the smallest foreign objects (eyelash, saliva, etc.) can cause quality issues. Therefore, it is crucial to minimize human contact with products during production. To this end, LG Innotek has introduced a completely automated logistics system at the Dream Factory, where coming across a person is a rare event. Apart from essential personnel, such as equipment maintenance and repair workers, all 10 steps of the FC-BGA production and logistics processes are unmanned. Dozens of autonomous mobile robots (AMRs) move materials around the production line autonomously. When a production order is placed, which is done automatically, based on the customer's delivery timeframe entered in the RTS (real-time schedule), the AMRs transport the raw materials to the process facility. Once the barcode on the raw material is detected, also done automatically, by the machine, the process recipe is automatically set on the equipment according to the product specifications through the recipe management system (RMS), after which the product processing begins. The AMRs are also responsible for loading the finished product back into the stocker. In addition, the process of peeling off the protective film from the panel (film detach) is also replaced by a robot. This enables the early prevention of fine scratches and defects caused by foreign objects such as dust particles and foreign substances. The construction of non-touch production facilities, involving such equipment as collaborative robots, in the entire process has significantly reduced mishandling by workers. Unmanned AI-based FC-BGA quality inspection, enhancing customer confidence by ensuring quality "transparency" The Dream Factory generates more than 200,000 files and 100GB of data related to FC-BGA production every day. LG Innotek collects this data throughout the production process through sensors installed in all of its facilities. By applying AI, which continuously learns from this big data, to the defect prediction and inspection system, the company has significantly reduced the lead time caused by defects. In addition, LG Innotek has applied an AI deep learning vision inspection system to the Automated Optical Inspection (AOI) process, which is the most important step in determining whether a product is of good quality. Tirelessly, the robot moves the finished FC-BGA board products to the vision screening inspection table. Next, the AI, which has been trained on tens of thousands of data points on defective and good quality FC-BGAs, detects micro-level defects that are challenging to identify with the naked eye, and it does so in only 30 seconds. LG Innotek is operating a further advanced AOI process. In the room next to the AOI equipment for faulty circuits, there is a much larger robot and inspection system. Called Line Quality Control (LQC), it can automatically check whether the various specifications (thickness, size, etc.) of the product requested by the customer have been fulfilled. The inspection data is immediately sent to the customer, ensuring product quality transparency, which leads to higher customer confidence. This industry-leading sophistication of LG Innotek's AOI equipment has been cited as one of the most impressive aspects of the factory by the global customers who have visited it. AI can identify defective products, and since every product has a barcode that tracks its process history, products that are deemed defective are automatically filtered out without the need for human intervention, reducing F-costs by more than 50%. Additionally, AI has been applied to the digital simulation system, which prevents product defects and equipment failures. Previously, the process of workers manually checking products for defects and identifying which machines were faulty and how to repair them in response to defects required a lot of time. This can now be significantly improved. By 2026, LG Innotek plans to introduce an intelligent Quality Management System (i-QMS) that detects and analyzes quality irregularities during production in real time and automatically corrects them. The company plans to automate the entire FC-BGA production process, especially by developing a platform that uses digital twin technology to share information on all processes, from product development to production, with customers in real time to enhance customer responsiveness. Optimized FC-BGA process equipment using digital twin technology, "halving the ramp-up period" Since even the smallest variables can lead to poor performance in FC-BGAs, equipment optimized for mass production and process recipes and production environments set to perfect values are fundamental to achieving high yields. The FC-BGA process equipment installed in the Dream Factory is set to optimal conditions through digital twin technology. In the past, identifying optimal conditions for the FC-BGA process required a lot of time and money, along with hundreds of tests. Before building the facility, LG Innotek managed to identify problems with the initial setup of the FC-BGA process facility in advance by conducting a "factory simulation" using 3D modelling in virtual space. This enabled the facility to be carefully set for optimal conditions, such as liquid, heat, and air flow, which were difficult to measure inside the actual facility. As a result, the ramp-up period (increase in production capacity by improving initial production yields) was shortened by nearly half compared to the previous operation period. In addition, digital twin technology is applied to the Line Monitoring System (LMS), which monitors production status in real time. The real-time monitoring system enables users to monitor the production line currently in operation, product movement, inventory status, equipment irregularities, production performance, and product quality status at a glance on the large screen of the integrated control room where the LMS is installed. This makes it possible to respond immediately in the event of any irregularity. Internalization of glass core technology, step-by-step entry into the high-end FC-BGA market: "Fostering the business into 700 million USD business by 2030" Over the past 50 years, LG Innotek has accumulated core technologies for high-value semiconductor substrates, such as ultra-fine microcircuits and high-density, multi-layer substrate matching technology (stacking multiple substrate layers accurately and evenly), through its substrate material components business. Based on this know-how, the company began full-scale mass production of FC-BGAs for personal computers (PCs) for North American big-tech customers at the end of last year and recently succeeded in securing additional global big-tech clients. This year, LG Innotek aims to enter the FC-BGA market for PC central processing units (CPUs). Its strategy is to enter the high-end FC-BGA market in phases, including entering the server FC-BGA market as early as 2026. In preparation for this, LG Innotek has already acquired facilities that are essential in the manufacturing of FC-BGA products for servers, such as "edge coating" that blocks the generation of dust particles. In line with this goal, LG Innotek will also accelerate the development of next-generation substrate technologies in collaboration with global big-tech clients. By 2027, the company plans to internalize technologies such as re-distribution layer (RDL) technology, which engraves microcircuit patterns directly onto the substrate; device embedding technology, which minimizes power loss by embedding devices into the substrate; and multi-layer core (MLC) and glass core (glass substrate) technologies, which prevent warping when implementing large-area substrates. In particular, LG Innotek has been promoting glass substrates by strengthening its collaboration with global customers. Minseok Kang, vice president and head of LG Innotek's Substrate & Material Business Unit, said, "LG Innotek will continue to expand the production of FC-BGAs that provide exceptional customer value based on its state-of-the-art Dream Factory and develop the FC-BGA business into 700 million USD business by 2030." According to the Fuji Chimera Research Institute, the size of the global FC-BGA market is expected to more than double from USD 8 billion in 2022 to USD 16.4 billion in 2030.

oil-gas

Apr 30, 2025

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