Canada's Nexen sees '03 chemical profits up on volume

13 February 2004 18:36  [Source: ICIS news]

TORONTO (CNI)--Canadian energy and chemicals firm Nexen reported a 3.7% profit increase in its chlor-alkali and sodium chlorate chemicals business for 2003, with the company Friday crediting higher sales volumes and cost cutting.

Net income in Nexen’s chemicals segment was Can$28m ($21m/Euro16m) on sales of Can$377m, up 2% from 2002.

Nexen top executive Charlie Fisher said chlor-alkali sales volumes increased by 6%, compared to 2002, and sodium chlorate sales were up 5%. He did not provide specific tonnage data.

Fisher also cited "cost reduction initiatives" during the year for the improved results.

For the fourth quarter ended 31 December, chemicals net income was Can$4m, down from Can$9m in the 2002 fourth quarter, on sales of Can$92m, down 7% on the year.

Fisher said an expansion at Nexen’s sodium chlorate facility in Brandon, Manitoba is on schedule for completion in October 2004. The company is shifting sodium chlorate production from a plants in Taft, Louisiana to Brandon, where capacity will go up by 33% to 260 000 tonne/year.

Said Fisher: "Following this expansion, our Brandon plant will be the largest sodium chlorate facility in the world, with the lowest cost production in North America."

Calgary, Alberta-based Nexen is primarily an oil and gas company with a number of projects in North America and globally. Nexen earlier this month revised downward its estimated proven reserves in Canada.

During a conference call today, company officials stressed the importance of the chemicals business in providing diversified and "annuity-like" income streams to the company. "We are not dependent on any one project for our success," Nexen chief financial officer Marvin Romanov noted.

Fisher said: "Our chemicals operations are a great business, with a solid base in North America and exciting growth prospects in South America."

Nexen’s overall 2003 net income was Can$639m, up 41% on the year, with officials crediting "attractive oil and gas prices and strong production." Overall revenues were Can$3.5bn, up from Can$3bn in 2002.

Merrill Lynch in a research note today described Nexen as "a fiscally conservative and operationally well grounded company."

By: Stefan Baumgarten
+1 713 525 2653

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