INEOS Q3 EBITDA up 16% on strong North America business

23 October 2012 15:07  [Source: ICIS news]

INEOS Chocolate Bayou complexLONDON (ICIS)--INEOS has posted a 16% year-on-year increase in earnings before interest, tax, depreciation and amortisation (EBITDA) for the third quarter of 2012 on the back of a stronger North American market, the Switzerland-headquartered petrochemicals company said on Tuesday.

The company generated EBITDA of €432m ($561m) for the quarter, compared with €371m in the third quarter of 2011, and €308m in the previous quarter of this year, which INEOS attributed to improved business in North America driven by cheaper feedstock prices in the region.

The gains were generated in spite of “subdued” petrochemicals markets in Europe and Asia, the company added.

“Petrochemical markets have continued to be subdued with industry sentiment remaining cautious, particularly in Europe and Asia. In contrast, business in North America has been strong with the benefit of its current feedstock advantage,” the company said.

INEOS said the comparative information excludes the results of its refining business, which was put into a joint venture in June 2011.

Earnings for INEOS’ olefins and polymers (O&P) business in Europe slumped year on year, with EBITDA for the quarter dropping to €53m from €80m in the third quarter of 2011, and demand for olefins shrinking in line with the softening macroeconomic environment in the region.

“Polymer market sentiment remained weak with reduced levels of discretionary demand. The softness in the polymer markets has also resulted in low margins in the quarter,” the company said.

The O&P North America unit drove the company’s earnings, with EBITDA growing to €202m from €126m reported in the third quarter last year, as a result of cheaper gas prices on the back of the shale gas boom, leading to strong cracker cycle margins.

INEOS said: “Overall polymer demand was also strong with derivative exports remaining high as gas crackers continued to benefit from a significant global cost advantage."

However, domestic polymers demand remains low, the company added.

EBITDA from the company’s chemical intermediates unit grew by 7.3% year on year to €177m in spite of “mixed” demand, the company said, following a 55% year on year drop in earnings during the second quarter.

Margins and demand for its Oligomers business were strong, according to INEOS, while lower acetone prices helped to maintain phenol margins, despite lower volumes. Nitriles sales were weak as a result of subdued demand for acrylic fibre and acrylonitrile-butadiene-styrene (ABS).

INEOS’ net debt stood at €6.3bn as of the end of September, while cash balances and undrawn working capital facilities were €1.2bn and €258m respectively at the end of the quarter, the company said.

($1 = €0.77)

By: Tom Brown
+44 208 652 3214

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