Hello everyone, and thank you for joining the Borouge Q4 2024 Earnings Management webcast. My name is Marie, and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I will now hand over to your host, Ms. Samar Khan, Vice President of Investor Relations, to begin. Please go ahead.
A warm welcome to everyone, and thank you for joining Borouge's fourth quarter earnings call. My name is Samar Khan, and I'm the Vice President of Investor Relations at Borouge. I have with me today the Borouge Management Team. Chief Executive Officer, Hazeem Al Suwaidi, Chief Marketing Officer, Rainer Hoefling, Chief Operating Officer, Dr. Hasan Karam, and Chief Financial Officer, Jan-Martin Nufer. We'll begin with a short presentation by the Management Team in respect to performance for the fourth quarter and full year 2024, as well as our outlook for the coming year. We'll then open the call to your questions. With that, I'll hand over to Hazeem to present the highlights.
Thank you, Samar, and thank you all for joining us today. I'm truly pleased to announce that Borouge has delivered an exceptional set of results for Q4 and the full year 2024. We maintained our strong trajectory and closed the year with record production volumes, the highest-ever sales volumes, and healthy pricing premia while maintaining strict cost discipline. Borouge achieved a net profit of $331 million in Q4, representing an increase of 15% on a year-on-year basis, beating market estimates. On a yearly basis, net profit increased by a significant 24% year-on-year to reach $1.24 billion. We also generated a robust cash flow for 2024 of $1.57 billion, representing an increase of 14% year-on-year, enabling our strong and consistent dividend. This outstanding performance across the business was driven by exceptional team efforts by our talented people.
As we step into 2025, I would like to emphasize that the company is well-positioned both strategically and financially to pursue accelerated growth and will continue to deliver exceptional shareholder returns. With that, I would now like to hand over to Rainer to provide the commercial update.
Thank you, Hazeem, and good afternoon, everyone. In Q4 2024, blended average selling price across polyethylene and polypropylene decreased 3% versus the previous quarter and remained flat on a year-on-year basis due to year-end destocking activities. In Q4, benchmark prices for both polyethylene and polypropylene remained flat. During the quarter, Borouge premia for polyethylene was below, and polypropylene was in line with through-the-cycle management guidance.
In full year 2024, premia for PE was in line with management through-the-cycle guidance, while polypropylene exceeded the guidance of $200 per ton for PE and $140 per ton for polypropylene, respectively. Borouge is well-positioned among industry peers and consistently delivers product premia above benchmark over the cycle. This is driven by its strategic focus on differentiated, durable products, geographic optimization, and the agility in navigating market challenges. I will now discuss sales volumes for the period before I ask Dr. Hasan to take us through the operational highlights. In Q4 2024, we achieved highest-ever sales volume of 1.467 million tons, up 3% versus the previous quarter and 8% on a year-on-year basis. Sales volumes for polyethylene were up by 10%, and for polypropylene were up by 5%, respectively, on a year-on-year basis.
Our sales volume from value-added segments represents the majority of our total sales, reinforcing our differentiation and scale strategy to achieve higher premia. In 2024, we launched nine new products, showcasing Borouge's strong innovation capabilities. The Asia-Pacific market continues to be the largest destination for sales in Q4, with 63% of total sales volume, followed by the Middle East and Africa with 30%. Other regions represent 7%. In Q1 2025, sales volume and pricing are expected to be in line with Q1 2024 levels.
To conclude, I would like to highlight Borouge's commercial excellence, which has been consistently reflected in the company's strong financial performance. In a challenging environment, our ability to optimize sales volumes by shifting between markets with better margins while maintaining cost efficiency and driving rapid innovation sets Borouge apart. This success is a testament to the company-wide collaboration and the dedication of our talented people. I will now hand over to Dr. Hasan for the operational highlights.
Thank you, Rainer, and good afternoon, everyone. I would like to start with HSE. Safety is our top priority, and our leadership team actively champions initiatives to maintain industry-leading safety standards. In full year 2024, we recorded a TRI rate of 0.07. On operational performance, I am pleased to share that Borouge achieved a record production volume of 5.2 million tons in 2024, supported by a high asset reliability rate of 98.5%. Total production increased by 3% year-on-year, with a PE volume up to 9% and PP up to 1%. In Q4, we delivered one of our highest-ever quarterly production volumes, 1.36 million tons, with a PE and PP utilization rate of 114% and 103%, respectively. Operational excellence remains a priority. We continuously optimize resources, improve efficiencies, and create value through discernment and capital allocation.
Regular maintenance is the key to sustaining our world-class asset base, ensuring high utilization rates, strong reliability, and safe, efficient operations. As a part of this, our Borouge 3 plant turnaround will take place in Q2 2025 and will have an estimated impact of 320 kilotons in the second quarter. With that, I will hand over to Jan-Martin to cover the financial update.
Thank you, Hasan. Good afternoon, everyone. Borouge continues to deliver outstanding results on a consistent basis. We're excited to report again in the fourth quarter a very strong net profit of $331 million, representing a 15% increase from the previous year and a 1% increase on a quarter-on-quarter basis. This is our highest quarterly net profit in the past 10 consecutive quarters. Q4 revenue was recorded at $1.6 billion, an 8% increase on a year-on-year basis, and a 1% increase from the previous quarter. Strong top line was supported by the highest-ever sales volumes enabled by our record operations performance. As highlighted before, Borouge delivered once more an exceptional EBITDA margin in the fourth quarter of 40% and a 41% margin for the full year 2024. This reflects our ability to generate outstanding profitability and maintain efficiency gains from the Value Enhancement Program.
On a yearly basis, revenue increased by 4% to $6 billion, and focused cost discipline helped in delivering a strong adjusted EBITDA of $2.5 billion and a net profit of $1.24 billion, up by a significant 14% and 24%, respectively, versus the same period last year. On to the next slide. When it comes to costs, we continue to make progress even after the very successful completion of our ambitious Value Enhancement Program in 2023 that delivered $607 million through revenue optimization and strategic cost management. Our target to maintain, to a large extent, the improvements from our program could be achieved. Fixed costs in 2024 could be managed with a $641 million, even slightly below the 2023 level with $643 million.
In Q4, we continued to operate our assets at a very high utilization rate, which resulted in one of the highest quarterly production volumes of 1,336 kilotons and 5.2 million tons for the full year, which is a record for Borouge. Due to high production activity, costs of goods sold, excluding depreciation and amortization in Q4, were up by 11% on a year-on-year basis and up 8% versus the previous quarter. Our overall selling and distribution expenses in Q4 increased 44% on a year-on-year basis and 14% versus the previous quarter due to higher freight costs and certain one-off items. General and administrative expenses in Q4 decreased by 40% from $55 million to $27 million on a year-on-year basis. On to CapEx and cash flow. Borouge's adjusted operating free cash flow in Q4 was recorded at $572 million, representing an increase of 9% on a year-on-year basis.
Cash conversion was strong at 88%. We also achieved a very significant free cash flow in the year of $1.57 billion, up 14% versus the previous year, supporting our consistent dividend payout. Net debt-to-EBITDA ratio stood at 1.1x as on the 31st of December 2024. The company successfully repaid over $200 million in debt during the year, continuing its path of active debt management. Prudent debt management and deleveraging remain a core focus, and since the IPO, we have paid back more than $1 billion of debt. Our robust business model supports strong cash flow generation and a very significant through-the-cycle dividend paying capacity. The company will make a final dividend payment of $650 million in April 2025, in line with the management's commitment to pay $1.3 billion dividend for the full fiscal year 2024.
As a trusted global leader in premium polyolefin solutions, Borouge is ideally placed to leverage its strengths and competitive advantages to grow and create sustainable value for our shareholders and stakeholders. I will hand over to Hazeem to summarize and conclude.
I will cover the key 2024 highlights related to innovation and sustainability. Innovation is at the heart of our business, driving product differentiation and premium pricing. In 2024, we launched nine new product grades, including the first made-in-UAE healthcare grade, aligned with our goal of generating at least 20% of annual sales from new products. Energy and infrastructure accounted for 40% of our total sales, and we have a strong pipeline catering to high-growth segments like electrification. We continue to harness AI and digitalization to enhance efficiency, sustainability, and innovation across our operations. These initiatives helped us generate $573 million in value, exceeding our $550 million target in 2024. On the sustainability front, Borouge was included in the S&P Global Large MidCap ESG Index, ranking in the top 15th percentile among 500 global chemical companies.
These achievements reframe our commitment to sustainability and our ability to meet both market demands and environmental standards through innovation. Moving to our 2025 guidance and outlook. After exceptionally high production and sales volumes in 2024, 2025 will be a turnaround year. Our Borouge 3 plant is scheduled for maintenance in Q2 2025, with an expected impact of 320 kilotons in the second quarter. In Q1 2025, we anticipate sales volumes and price to remain in line with Q1 2024 levels. Despite industry challenges, Borouge has consistently outperformed market expectations and remains well-positioned. We continue to leverage our global scale, innovation, and diverse product portfolio to drive long-term resilience. Our focus on high-value segments, particularly in infrastructure and consumer solutions, has enabled us to maintain strong product premiums even in challenging market conditions. Looking ahead, we are pursuing transformational growth driven by Borouge 4, international expansion, and asset revamps.
Our commitment to accelerating growth is reinforced by the productivity gains through AI and digital transformation. Since our IPO, we have delivered strong shareholders' value. We have consistently provided an annual dividend of $1.3 billion in the years 2023 and 2024, translating to a current yield of 6.4%, one of the highest in our industry, and I am pleased to confirm our intention to maintain this $1.3 billion dividend payout in 2025, backed by strong cash generation and a solid balance sheet. Now, with that, we are pleased to take your questions.
To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure that your device is unmuted locally. We have a question from Ricardo Rezende of Morgan Stanley. Your line is now open. Please go ahead.
Hello. Good afternoon. Thanks for taking my question. My first question is on the price premium. When you look at the sequential behavior, it has declined compared to the third quarter. Is there any specific drivers for that, or is it related to the very strong volumes that you had in the fourth quarter? And then my second question, if you're able to provide us with some indication on how CapEx should be in 2025? We've seen this decline in 2024. Should we see something closer to what were you running in 2022 and 2023? Thank you.
Yeah, I take the first question. Thank you very much for this. First of all, if you look at it specifically on the polypropylene side, that was in quarter four, we are on the guidance. It went down a bit, but we are on the guidance in polyethylene a bit below. But as you correctly said, this is, of course, also due to the fact that we had a strong volume push towards quarter four, specifically also in polyethylene, but it delivered quite substantial margins because the premium is always measured against the commodity benchmark price. So this you will see changing then again in quarter one, where there's a similar trend last year. It's a bit cyclical, but overall, we were managing the premium in polyethylene on the guidance.
In polypropylene, we increased the premium quite substantially based on, as I always said, we are moving towards a higher-value product in one plant, a copolymer plant, and that we realized in 2024 with an outstanding result. You will see this changing in quarter one again.
Ricardo, maybe I can take the second question related to the CapEx. So as you mentioned, we had lower CapEx in 2024, which was mainly attributable to the successful move of the turnaround into 2025. So if I relate that back to our CapEx guidance, which we have been giving on a normalized 180 to 240 level, you can expect that with the move of the turnaround, which also means that all the CapEx-related projects to the turnaround will be happening in 2025, that you see a spike above the guidance here in 2025 for the CapEx.
Okay. That's clear. Thank you.
Perhaps maybe I want to comment also on our CapEx for 2025 and beyond. As you have seen, our CapEx is very much related to maintaining the high standard safety in our plants, asset integrity, and ensuring the maximum reliability of our operations across all our operations in Borouge. We have demonstrated an exceptional historic result of our production in year 2024, 5.2 million tons in 2024. That's clearly because of the programs and initiatives we have taken toward ensuring operational excellence at maximum. Besides our CapEx for our maintenance, which is Borouge 3, scheduled this year, we are also continuously looking for opportunities to unlock further value in our assets.
Our EU2 is already awarded FEED, which is scheduled also to unlock further more than, I would say, AED 900 million of value out of our assets, extracting more gas and feed, and that will also bring a higher production volume, 230 kilotons of production out of EU2. Besides this, also, we continue to invest in digitalization and AI. We have demonstrated over-delivering our set target. We have indicated the 550 we have delivered beyond that because of the latest technology and the right partnership we have been established in the company to ensure we maximize efficiency across our operations.
As a reminder to ask a question, please press star followed by one on your telephone keypad. We currently have no further questions, so I will hand back to the management team for closing remarks.
That's very short and sweet. We'll make a little other things. Fantastic. Thanks, everyone, for joining us today. I'm looking forward to another excellent year 2025. Thank you.