Borouge: Q2 revenue up 7.7%, but EBITDA down 10.5% — margin squeezed by higher costs

Borouge раскрыла результаты за второй квартал 2026 года: выручка выросла на 7,7% год к году, до 1 406,0 млн долл., однако EBITDA снизилась на 10,5%, до 394,7 млн долл., а чистая прибыль практически не изменилась (–0,4%). Маржа EBITDA сократилась с 33,8% до 28,1%. При текущей оценке в 12,0 EV/EBITDA LTM и P/E 20,2 акция выглядит скорее привлекательной, учитывая сильный баланс и потенциал восстановления маржи.

Key takeaways

— Q2 revenue grew 7.7% after two quarters of decline

— EBITDA fell 10.5% on higher costs, margin dropped to 28.1%

— Net profit nearly flat despite lower EBITDA

— Operating cash flow in Q2 dropped sharply

— Debt increased, but Net Debt/EBITDA remains moderate

— 2025 dividend of $658.3 million exceeds 2025 net profit

— Valuation: EV/EBITDA 12.0 and P/E 20.2 — above three-year averages

Attractiveness

Key figures, USD bn

Q2 revenue grew 7.7% after two quarters of decline

In Q2 2026, Borouge's revenue reached $1,406.0 million, up 7.7% year-on-year. This is the first quarterly growth after declines of 17.2% in Q1 2026 and 9.5% in Q3 2025. Q1 2026 revenue was the lowest in two years at $1,175.2 million.

The Q2 growth likely reflects recovering polyolefin prices amid a global shortage, as noted in the Q1 2026 report. However, sales volumes may have remained under pressure due to regional geopolitical tensions, limiting export flows.

EBITDA fell 10.5% on higher costs, margin dropped to 28.1%

Q2 2026 EBITDA was $394.7 million, down 10.5% year-on-year. EBITDA margin fell from 33.8% to 28.1%. This indicates that revenue growth did not offset higher cost of sales and operating expenses.

The Q1 2026 report mentioned increased logistics and insurance costs due to geopolitical tensions, which likely continued to pressure margins in Q2. The company may also have faced higher feedstock prices.

Net profit nearly flat despite lower EBITDA

Q2 2026 net profit was $191.0 million, only 0.4% lower year-on-year. This was possible due to lower finance costs and possibly one-off tax effects.

In Q1 2026, net profit was significantly lower at $154.7 million, reflecting a weak operating environment. Nevertheless, trailing twelve-month net profit reached $964.4 million, implying a P/E LTM of 20.2.

Operating cash flow in Q2 dropped sharply

Q2 2026 operating cash flow was only $179.0 million, almost three times lower than a year earlier ($553.8 million). This was due to higher inventories and receivables, as well as increased tax payments.

Trailing twelve-month operating cash flow was $1,900.0 million, covering capital expenditures and dividends, but with a smaller cushion than in previous periods. Q2 capex rose to $111.7 million, almost double the average of the prior four quarters.

Debt increased, but Net Debt/EBITDA remains moderate

Net debt at end-Q2 2026 was $3,206.3 million, up $0.6 billion from the previous quarter and $0.7 billion over the last twelve months. The increase is related to working capital financing and capex.

Nevertheless, Net Debt/EBITDA LTM stands at 1.46, a moderate level for a petrochemical company. The company has access to credit lines and, according to the Q1 report, refinanced its debt through BGI.

2025 dividend of $658.3 million exceeds 2025 net profit

The Board approved a 2025 dividend of $658.3 million (8.1 fils per share), paid in April 2026. This exceeds 2025 net profit of about $1,123 million (sum of quarterly figures), indicating a high payout ratio.

For 2026, we estimate a dividend in the range of $600–650 million, based on current profitability and company policy. However, if operating cash flow remains weak, the company may cut payments to preserve its balance sheet. The current dividend yield of about 3.4% ($658.3 million against market cap of $19,439.9 million) looks moderate compared to historical levels.

Valuation: EV/EBITDA 12.0 and P/E 20.2 — above three-year averages

Borouge's current multiples – EV/EBITDA LTM of 12.0 and P/E LTM of 20.2 – are above their three-year averages (which, according to our data, are around 10.5 and 18.0, respectively). This implies the market is pricing in a margin and profit recovery in coming quarters.

ROE of 19.1% supports a premium to book value. However, if EBITDA margin does not return to above 30%, the current valuation may prove stretched. Key drivers will be polyolefin price dynamics and stabilisation of the geopolitical situation.

Valuation on the latest reported figures

Bottom line

Borouge showed revenue recovery in Q2, but EBITDA margin remains under pressure and operating cash flow dropped sharply. Net profit was nearly flat thanks to lower finance costs, but this does not offset weak operational generation. Debt increased, yet Net Debt/EBITDA remains moderate. The 2025 dividend was generous, but repeating it in 2026 is questionable given weak cash flow. At current valuation above historical averages, the share looks rather attractive, but only if margins start recovering in coming quarters.