24 July 2012 17:17 [Source: ICIS news]
LONDON (ICIS)--INEOS’s second quarter earnings before interest, tax, depreciation and amortisation (EBITDA) fell 46.5% to €308m ($376m) year on year in the second quarter and were down 33.8% from the first quarter of 2012, the company said on Tuesday.
“After a fairly strong April, the impact of steeply declining oil prices during the quarter adversely affected May and June's historical cost results,” INEOS said. “Non-cash inventory holding losses of approximately €141m were incurred during Q2 [the second quarter], 2012, mainly in the O&P [olefins and polymers] segments.
INEOS said that comparative information excludes the results of its refining business, which was put into a joint venture with PetroChina in July 2011.
The INEOS olefins and polymers (O&P) business in Europe was hardest hit by the economic slowdown and feedstock and product price movements.
It generated EBITDA of €57m compared with €146m in the year-earlier period.
“Demand for olefins in the quarter was moderate, with butadiene continuing to perform well,” INEOS said. “The large decreases in naphtha prices in the period led to healthy cracker margins during the quarter, however volumes have decreased with some customers destocking in the period.
“Polymer demand was subdued, as customers anticipated lower prices in the wake of weakening oil and naphtha prices. Softness in the commodity polymer markets has also resulted in low margins.”
INEOS also had its cracker at Rafnes in Norway on a scheduled major turnaround in the quarter.
The O&P North America segment businesses continued to benefit from gas feedstock economics and produced a record quarterly performance before inventory holding losses were taken into account.
Reported EBITDA for the segment was down 6.1% at €132m.
“Polymer demand remains solid overall, with derivative exports filling the gap from weaker domestic demand as gas crackers remain very competitive globally,” the company said.
One of INEOS’s crackers at Chocolate Bayou in Texas was in a scheduled turnaround in the quarter.
INEOS said that its chemical intermediates EBITDA dropped 55.4% year on year to €119m with lower feedstock prices and the weak macroeconomic environment having an impact on sentiment.
Margins and volumes in phenol were healthy, however, the company said, because of supply-side influences. Demand for oligomers was “steady” with “solid margins in all sectors,” it added.
“Volumes and margins for the nitriles business continue to be relatively weak, with subdued demand for acrylic fibre and ABS [acrylonitrile, butadiene, styrene]. The oxide business had a mixed performance for the quarter with EO [ethylene oxide] demand in Europe holding up but offset by slow demand for glycols, especially in Asia,” INEOS added.
($1 = €0.82)
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