Basell Q1 EBITDA falls 15% on weak olefins margin

18 May 2006 16:16  [Source: ICIS news]

LONDON (ICIS news)--Basell on Thursday blamed a 15% fall in first quarter profits on  poor cracker margins in Europe and weaker results from North American polyolefins.

Quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) for the world’s largest polypropylene (PP) producer were Euro214m ($276m) on a pro forma basis compared with Euro252m in Q1 2005. The results had followed the expected seasonal trend, Basell said, despite being below those for the strong 2005 period.

Pro forma EBITDA in the fourth quarter of 2005 was Euro225m.

First quarter revenues, excluding eliminations and unallocated sales, were 22.6% higher at Euro2.59bn.

Basell said the second quarter outlook was positive. Polyolefins demand in Europe remained strong, it said, adding that European price increases were going through following higher monomer settlements and prices starting to move up in North America.

Cracker margins were good in April but early May had seen further naphtha price increases.

The company said it saw good demand for advanced polyolefins in all markets and that price increases were progressing on the back of higher second quarter monomer costs.

In the first quarter, EBITDA for the key polyolefins business was down 28.7% at Euro134m on sales 28.8% higher at Euro2.25bn.

Basell said the European polyolefins market had returned to growth in the first quarter and that despite some low density polyethylene (ldPE) availability issues sales volumes for polyethylene and polypropylene were higher.

Polypropylene spreads were strong during the quarter, it added.

The good polyolefins result, however, were partially offset by weaker cracker results negatively affected by higher naphtha prices and lower first quarter contract monomer prices.

The North America results were down with prices under pressure due to customers anticipating monomer settlements which did not materialise, Basell said. Results from the international polyolefins business were driven by strong volumes and spreads, it added.

Advanced polyolefins EBITDA was up 30% at Euro39m on sales up 34.9% at Euro390m. Sales volumes had increased by 22% in the quarter and record low stock levels helped reduce working capital, Basell said.

Basell sold three technology licences in the quarter for a total annual capacity of 602,000 tonne. Pro forma EBITA for the technology business was up 38.2% at Euro47m on revenues 14.5% higher at Euro87m.

The net result from joint ventures and associated companies was down 46% at Euro14m due largely to a planned maintenance shutdown in one of its larger joint ventures, Basell said.

Taking into account capital spending of Euro55m in the quarter against Euro42m last time, free cash flow before investments and divestment was Euro27m compared with a free cash outflow of Euro178m in the first quarter of 2005. Basell said that lower working capital requirements had driven what it called “excellent” cash generation in the quarter.

First quarter net profit for the period was Euro31m. A comparative Q1 2005 figure was not given.

By: Nigel Davis
+44 20 8652 3214

< previous article(ICIS Chemical Business podcast November 2, 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly