16 May 2013 14:34 [Source: ICIS news]
By Franco Capaldo
LONDON (ICIS)--Borealis remains upbeat with its financial performance despite a fall in first-quarter net profits, CEO Mark Garrett said on Thursday.
The Austria-headquartered plastics, chemicals and fertilizer producer's first-quarter net profit fell steeply to €61m ($78m) from €140m in the same period last year.
The fall was partly due to soft market conditions for the company's European polyolefins business and because of lower profits from Borouge, Borealis's joint venture with Abu Dhabi National Oil Co (Adnoc), on the back of a planned turnaround for routine maintenance.
“Our take on it is that they [earnings] are not negative at all. We have planned this year for a dip in profits and actually the first quarter was above expectations because we knew that we were going to have Borouge 1 and Borouge 2 [crackers and polyethylene (PE) and polypropylene (PP) plants] down for turnaround between December and March,” Garrett said.
The plants have been restarted successfully and production levels have returned to normal.
The company is also currently heavily involved in the start-up of its Borouge 3 expansion project in Abu Dhabi, which will lift the annual production capacity at the integrated olefins and polyolefins site to 4.5m tonnes by mid-2014 from 2m tonnes/year today.
“We knew we would be less profitable this year with the expectation of course that in 2014, 2015, 2016, you start see the full impact of Borouge 3,” Garrett said.
“In 2014, not so much, because you are turning it on. You are going to have teething problems, you need to get those solved. You will be running a simple product slate because you do not want to run a complex [of] products. In 2015, the running is more sophisticated and in 2016, you should have it all ironed out,” he added,
Garrett said that Borealis’ Base Chemicals business group, including fertilizers, delivered results above the same quarter of last year which helped lift the company’s group sales in the first quarter by 5.2% year on year to €1.98bn.
The CEO also said the group would further optimise its European operations in order to be sustainably profitable. Borealis will continue to drive its scrap-and-build programme [taking down older plants and replacing them with new facilities], which it has been implementing over the past 10 years.
“We will continue to drive the average age of the fleet down as we take older assets offline,” Garrett said.
Earlier on Thursday, the company also announced that the start-up of a new semi-commercial polyolefins plant in Linz, Austria, is progressing well.
“Preparations are underway to commence the qualification process at Borealis’ key commercial production facilities during the second quarter of 2013. The second line within the catalyst plant, which will focus on the development of new catalysts, was completed during the first quarter of 2013,” Borealis added.
($1 = €0.78)
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