LONDON (ICIS)--Borealis’ first-quarter net income increased by 23% year on year to €313m on the back of higher margins at its polyolefins division and despite a fall in income from its fertilizers operations, the Austrian chemical major said on Friday.
Sales rose to €2.03bn during the first quarter, up 8.5% year on year.
“The strong result was driven by continuing high margins in the polyolefins business and by an improved contribution from [Abu Dhabi’s petrochemical complex] Borouge,” said the company.
“The contribution from Base Chemicals was lower compared to the first quarter of 2016, as a result of a more difficult fertilizer market environment.”
The company did not release more financial details relating to the first quarter.
Borealis is privately owned by Abu Dhabi’s Mubadala Investment Company, with a 64% stake, and Austrian energy major OMV (36%).
The company said that it had paid in dividends to those shareholders €750m for the year, although it did so at the expense of increasing its net debt by €619m.
“Despite the increase in net debt, Borealis’ financial position remains strong, with a gearing of 21% at the end of the first quarter 2017,” it said.
Gearing defines the level of a firm’s debt related to its equity capital and a measure of financial leverage showing the extent to which operations are funded by lenders versus shareholders.
Borealis reiterated that, together with joint venture partners France’s Total and its sister company NOVA Chemicals (also under ownership of Mubadala), it will take a decision on building a 1m tonne/year ethane cracker, as well as a 625,000 tonne/year polyethylene (PE) plant, in the US Gulf Coast by the end of 2017.
“The ethane cracker and [branded technology] Borstar PE plant are planned to start-up in late 2020. The JV [joint venture] will create significant synergies by enabling both a strong integration of the value chain as well as the first-time use of the proprietary Borstar PE process technology in the Americas,” said Borealis.
“It will also provide competitive export access to markets outside of North America and help meet the growing global demand for PE.”
Despite the suffering fertilizers operations, Borealis announced in April it was to acquire an agrochemicals company in Bulgaria, for an undisclosed fee.
“In the second quarter, Borealis expects another solid result. The fertilizer market conditions are improving and we expect the polyolefins business and Borouge to continue to perform well,” said Borealis’ CEO, Mark Garrett.
“The main challenge going forward this year will be the successful execution of a record number of planned turnarounds, involving multiple locations.”
ICIS will publish an interview with the CEO and CFO of Borealis later on Friday