Borealis starts off the challenging year 2010 with a positive result
Borealis recorded a net profit of EUR 54 million in the first quarter of 2010 in a stabilising market
Borealis announced a net profit of EUR 54 million for the first quarter of 2010, compared to a net loss of EUR 56 million in the first quarter of 2009. Despite an increase in net debt, the company’s financial position remains solid with a gearing ratio of 49% at the end of Q1, compared to 43% in Q1 2009, within Borealis’ target range of 40-60%.
In line with the general market trend, both feedstock prices and polyolefin market prices continue to increase. Due to this development as well as some delays in expansion projects in the Middle East, industry margins improved during the first quarter of 2010. Borealis’ positive result was also driven by an increase in sales of value added products within the company’s portfolio.
In the base chemicals business group, Borealis saw some recovery with sales volumes in melamine and plant nutrients as well as in phenol. The results of Borealis’ joint venture Borouge also contributed positively to the results of the first quarter.
In an effort to stay competitive, Borealis closed, as planned, its high-density polyethylene plant in Beringen, Belgium on March 31.
Borealis’ major investment in a new 350,000 tonnes per year LDPE plant in Stenungsund, Sweden is in the final start-up phase and will be inaugurated in June 2010. In the Middle East, the Borouge 2 project is preparing to start up in the middle of this year and Borouge 3, which will add another 2.5 million tonnes of polyolefin capacity by 2013, is in the FEED (front-end engineering and design) phase with site preparations ongoing. The preparations for the groundbreaking of the Innovation Centre in Abu Dhabi, Borouge’s world-scale innovation facility as well as the inauguration of the Compound Manufacturing Unit (CMU) and Shanghai logistics hub proceeded with the events taking place end of April.
As part of its strategy to further diversify its financing sources, Borealis prepared its inaugural bond issue for launch in Austria in late April. The bond was very successfully placed with a final volume of EUR 200 million at attractive terms.
“The positive result in the first quarter of 2010 is the outcome of some stabilisation that we can see in the international polyolefins industry as well as our continuous efforts in cost competitiveness and efficiency,” says Borealis Chief Executive Mark Garrett. “But we cannot expect the positive upward trend to continue throughout 2010. We need to remain alert and cautious as we expect the second half of the year to be more difficult with additional capacities coming on stream in the Middle East and our results will be impacted by two major start-ups. We will continue on the path that has taken us successfully through this storm so far – sticking to our strategy of Value Creation through Innovation and focusing on efficiency improvement, cost and operational excellence while never compromising on safety.”
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