Borealis posts Q4 net loss of €122m as demand bottoms out

11 March 2009 09:00  [Source: ICIS news]

By Mark Watts

Borealis CEO Mark GarrettLONDON (ICIS news)--Borealis posted a net loss of €122m ($154m) in the fourth quarter of 2008, dropping from a €58m gain in the same period a year earlier due to plummeting demand, the Austria-based petrochemicals producer said on Wednesday.

More than half the loss was due to inventory impairment at year-end, the company said.

Borealis’ sales dropped 16% in the fourth quarter to €1.35bn, while it fell to an operating loss of €199m from a gain of €28m in the year earlier period.

For the full year of 2008, the company posted a 55% drop in net profit to €239m.

“Though the global recession has impacted our business, we have come through 2008 with some solid results,” said CEO Mark Garrett.

“We expect 2009 to remain very difficult, probably more difficult than 2008 and we don’t really expect to see an improvement in demand in the world economy until 2010,” he told ICIS news.

Borealis is facing the triple impact of the financial crisis, falling demand in key end-user markets and the effect of large-scale polyolefins plants coming on stream in the near-term.

Demand from the automotive industry for polypropylene (PP) had remained flat this year and was not expected to improve, though Borealis, along with other major PP producers, had noted resilience in food packaging applications.

The company plans to restrict capital spending as much as possible in 2009 and focus on its two major projects in Abu Dhabi and Stenungsund, Sweden.

Garrett said expansion of the Borouge petrochemicals complex and its new 350,000 tonne/year low density polyethylene (LDPE) plant in Sweden were both on track.

"Outside those two investments we've been trying to preserve as much cash as we can to allow us to make those investments," said Garrett.

 
"They're vital for our future," he added. "If we can complete them, with Borouge scheduled for mid-2010, we could catch the beginnings of improvement in the global economy."

Borealis had been lucky that it managed to set up its financing and debt repayment schedules before the crisis hit, Garret said,

“We have about €500m of committed back-lines which don’t mature for the most-part until 2013,” added CFO Daniel Shook.

“We don’t have much debt maturing over the next several years, we’ve got a good liquidity position and will continue to work with our banks to makes sure that’s robust,” he added.

Borealis’ interest-bearing debt increased by €453m in 2008 largely due to investment projects such as the LDPE plant in Stenungsund.

Borealis has suspended its shareholders' dividend until business conditions improve. The company is jointly owned by Abu Dhabi’s International Petroleum Investment Company (IPIC) (64%) and Austrian oil and gas group OMV (36%).

($1 = €0.79)

To discuss issues facing the chemical industry go to ICIS connect
For more on Borealis visit ICIS company intelligence


By: Mark Watts
+44 20 8652 3214



AddThis Social Bookmark Button

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

ICIS news FREE TRIAL
Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index