Borealis Q4 profit falls on weaker polyolefins despite increased sales

LONDON (ICIS)–Borealis’ rise in fourth-quarter sales could not stop its profit from falling on the back of a “weaker economic and industry environment” for polyolefins, the Austrian chemicals and fertilizers major said on Friday.

Equally, the sharp drop in fourth quarter profit also reflected a €92m impairment charge for the fertilizers division.

€/m	Q4 2018	Q4 2017	Change
Sales	2,091	1,852	13%
Net profit	94	247	-62%

Key points:

– The company did not mention in its quarterly results its fertilizers division, which has acted as a drag in profits in past years.

– Other major chemicals producers have also reported a weaker fourth quarter on the back of the deterioritating economic environment.

– Annual company sales increased, but net profit also suffered.

€/m	2018	2017	Change
Sales	8,337	7,564	10%
Net profit	906	1,095	-17%

Outlook:

– In 2018, the company’s joint venture in Abu Dhabi with ADNOC, Borouge, started construction of fifth polypropylene (PP) unit within Borouge 3.

– “This will grow Borouge’s PP capacity by more than 25% to 2.24m tonnes/year and unlock new opportunities to boost the local economy,” said the company.

– Borealis’ new CEO’s first set of annual results was not too positive, and Alfred Stern himself warned that the global slowdown and “increased geopolitical risk” would cause market conditions to deteriorate further in 2019.

– “Additionally, we are convinced that the dedicated management team for the Fertilizer and Melamine business will achieve significantly improved financial performance quickly,” he said, referring to the carve-out undertaken in September for the struggling division.”