Edited from annual report and company website
Borealis states that its strategy based on “value creation through innovation” matched with its “cutting-edge” Borstar technology is what makes the company “unique”. It believes that the years ahead will be exciting but also very challenging. However, it will keep to its value creation strategy through innovation, providing solutions to its key markets in infrastructure, automotive and advanced packaging across Europe, the Middle East and Asia. “This has been a winning formula for us, and we will stick to it”, says chief executive officer, Mark Garrett. 
At the same time, the company states that it needs to prepare for some challenging market conditions ahead, which it says are forecasted to come its way. This means it will need to stay competitive by cutting costs, simplifying its organisation and becoming “more nimble” so it can adapt to the coming challenges and emerge in a solid financial position.
The key priorities for Borealis in the next three to five years will focus on specific tasks. Firstly, it will continue to penetrate the rapidly growing markets in the Middle East and Asia with its value-adding products. In Europe, it will concentrate on cost competitiveness, innovation and commercial excellence. It will also prioritise the development of its Base Chemicals business.
In addition, the Middle East and Asia will play a major role in the growth of the company. “Borouge is already contributing very strongly to our results, and the Borouge 2 project is the centrepiece of our efforts to meet the continually increasing demand for our products in the Middle East and Asia”, says Garrett.
Borouge, its joint venture with the Abu Dhabi National Oil Company (Adnoc), is leading this major expansion project in Ruwais, Abu Dhabi. Contracts valued at over $4.7bn have been signed to date for the expansion, which is expected to triple annual production capacity to 2m tonnes/year of polyolefins when it comes onstream in 2010. Polypropylene will also be produced at the site for the first time.
Other strategic developments in Europe included the announcement of a world-scale polyethylene unit in Sweden to be ready in 2009. This is said to be the largest capital investment project ever implemented by Borealis in Europe and will be a critical contributor to value creation in the future.
Looking ahead, on the back of a “volatile” plastics industry and with oil prices staying “very volatile but at a high level” Borealis is preparing itself to withstand possible effects of an industry downturn and believes it may see some impact on its margins.
“In fact, the whole value chain is affected, creating a sort of inflationary bubble. To address this, we will continue to focus on less volatile market segments and take advantage of our feedstock flexibility, enabling us to continue providing the innovative solutions our customers expect based on value related pricing”, says Garrett.
Strategy
(1) Growing its business in infrastructure, automotive and advanced packaging;
(2) Expanding the Abu Dhabi complex to supply growth in the Middle East and Asia;
(3) Strengthening its European base, ensuring cost competitiveness from feedstocks to customers;
(4) Developing its Base Chemicals business;
(5) Pursue operational excellence;
(6) Achieve a step change in innovation;
(7) Exceed in serving its customers with a focus on quality and reliable execution; and
(8) Build a cross-cultural organisational capability.
Its financial strategy includes:
(1) Outperform financially;
(2) 11% + average Return on Capital Employed (ROCE) after tax; and
(3) 40% - 60% debt to equity ratio.
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Financial highlights: Borealis, year ended 31 December
| | 2008 | 2007 | 2006 | 2005 | 2004 |
| Sales (€ m) | 6,697 | 6,350 | 5,742 | 4,814 | 4,628 |
| Operating Profit (€ m) | 163 | 451 | 353 | 236 | 278 |
| Net Profit (€ m) | 238 | 533 | 327 | 226 | 203 |
| Total Assets (€ m) | 4,828 | 4,631 | 3,671 | -- | -- |
| Number of Employees | 5,385 | 5,060 | 4,639 | 4,536 | 4,547 |
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Borealis
Company Structure
Borealis is a fully integrated petrochemical company. Since June 2005, Borealis is owned by the International Petroleum Investment Company (IPIC) of Abu Dhabi (64%) and by OMV, the Austrian oil and gas group (36%). Borealis was previously owned by Statoil (50%), OMV (25%), and IPIC (25%). It became operational in March 1994.
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