INEOS Q3 EBITDA grows 25% as chemical market improves

26 October 2010 11:50  [Source: ICIS news]

INEOSLONDON (ICIS)--INEOS's third-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) grew 24.9% year on year to €406m ($564m), excluding refinery inventory holding losses, thanks to a continuation of improved demand for chemicals, the Swiss-headquartered company said late on Monday.

The EBITDA, which combines replacement cost (RC) EBITDA for refining and historical cost (HC) EBITDA for chemicals, was €325m for the third quarter of 2009 and €496m for the second quarter of 2010, it added.

INEOS uses RC/HC EBITDA to measure its compliance with the financial covenants under its senior banking facility.

Replacement cost accounting in refining helps iron out losses and gains made against shifting oil prices.

“Demand for chemical intermediates has continued to be strong across all sectors and all regions. The market for acrylonitrile has been very tight and high margins have been maintained,” INEOS said in a statement.

“One of the lines in Cologne had a scheduled turnaround in the quarter. The global market for phenol has remained tight, with healthy margins as a result. Underlying demand for oligomers continued to improve in the quarter. The oxide business continued to benefit from strong demand for its derivative products,” it added.

The Olefins & Polyolefins (O&P) Europe segment HC EBITDA for the quarter was €95m, against €65m in the third quarter of 2009. O&P North America HC EBITDA in the third quarter was €119m against €105m.

Demand for olefins in Europe continued to be strong, INEOS said, which had resulted in high margins in the quarter, particularly in butadiene. Polymer demand had also remained firm across all products, it added.

INEOS said that in the US, the O&P business market had continued to be tight, with improving domestic demand.

“Demand for polypropylene continues to be strong and domestic demand for polyethylene continues to recover, especially in the automotive, injection moulding and speciality packaging sectors,” it said.

The INEOS refining segment reported a RC EBITDA third-quarter loss of €59m, compared with a loss of €32m in the same period last year.

Inventory holding losses in the latest quarter were €4m, compared with gains of €51m in the third quarter of 2009, it added.

INEOS said its net debt at the end of September 2010 was approximately €7.0bn and net debt leverage 4.3 times. Cash balances at the end of the quarter were €547m.

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By: Franco Capaldo
+44 (0)20 8652 3214



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