Canada's NOVA Chemicals plummets to Q4 loss of $214m

29 January 2009 14:12  [Source: ICIS news]

A NOVA plantLONDON (ICIS news)--NOVA Chemicals posted a net loss of $214m (€163m) for the fourth quarter, compared to a net gain of $126m in the year earlier period, the Canadian petrochemicals producer said on Thursday.

NOVA said the significantly lower performance was due to falling margins as energy and petrochemicals prices dropped. During the fourth quarter, sharp price reductions and lower sales volumes contributed to the margin decline.  

The company’s revenue dropped 36% to $1.15bn, down from $1.8bn in the fourth quarter of 2007.

NOVA said it had amended covenants with its banks that should give it use of bank credit lines during the first half of 2009. This followed warnings form credit agencies that the company could violate these contracts due to tight liquidity.

“The company generated strong cash flow, increased its liquidity and reduced debt by $290m in the quarter despite a large feedstock cost dislocation and low polyethylene order levels in October and November,” said NOVA CEO Jeff Lipton.

NOVA said it incurred $382m before tax in exceptional items for the quarter, mainly due to inventory write-downs.

The group’s olefins and polyolefins business unit reported an EBITDA (earnings before interest, tax, depreciation and amortisation) loss of $210m, down from a gain of $308m in the same period last year.

The decline was due to lower prices, lower sales volumes and higher flow-through feedstock costs in the fourth quarter year on year and inventory write-downs.

The INEOS NOVA joint venture reported an EBITDA loss of $77m, down from a loss of $6m during the same period a year earlier driven by falling prices and volumes for styrene monomer and polystyrene.

($1 = €0.76)

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By: Mark Watts
+44 20 8652 3214



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