INEOS sees profits rise in March on Asia demand

24 April 2009 13:48  [Source: ICIS news]

LONDON (ICIS news)--INEOS saw some market improvement towards the end of the first quarter and produced a replacement cost operating profit, excluding depreciation and amortisation (RC EBITDA), in March of €73m ($96m), the company said on Friday.

The uptick against the backdrop of what the company called a “challenging” start to the year was partly led by increasing demand from Asia, it added in a trading update.

RC EBITDA for the first quarter, which is EBITDA adjusted to exclude inventory holding gains or losses, was in the region of €170m. Historical cost EBITDA was €200m.

INEOS in November forecast a full-year 2008 EBITDA in the range of €1.7bn-1.8bn before inventory holding losses of €400m and exceptional events of €180m. Its sales in 2008 are estimated by ICIS news at $40.5bn.

INEOS, which negotiated a waiver of certain debt covenants towards the end of last year and agreed to present a new business plan to its lenders this April, said that the group was in line to achieve fixed cost reductions of €200m in 2009. It had cut physical inventories by 20% at the end of the quarter compared to historical levels.

The group had €560m in cash at the end of the quarter, having made a repayment under its securitisation facility of about €210m and paid bank interest of €210m in March. Its net debt at the end of March was €7.5bn.

“INEOS has successfully implemented the short term action plan as set out in the lender presentations made in November 2008,” it said.

The company plans to close two polypropylene (PP) lines at Battleground in Texas and per/trichlorethylene facilities in Runcorn, England. A cumene plant in Port Arthur, Texas, has been mothballed. INEOS said it would cut capital spending this year to €250m.

INEOS said its olefins and polyolefins (O&P) business had experienced weak market conditions in the first quarter but that there had been some improvement for O&P in North America.

Both its refineries were run at maximum rates for most of the quarter, it said, led by firm middle distillate demand.

The intermediates businesses, including phenols, oxides nitriles and chlorvinyls had lifted from December/January lows helped by sales to Asia. Demand into durables, automotive and construction markets remained weak, INEOS said, although sales into consumables remains relatively firm.

($1 = €0.76)

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By: Nigel Davis
+44 20 8652 3214

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