11 March 2009 09:00 [Source: ICIS news]
By Mark Watts
LONDON (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 ?xml:namespace>
Garrett said expansion of the Borouge petrochemicals complex and its new 350,000 tonne/year low density polyethylene (LDPE) plant in
"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
($1 = €0.79)
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