Borealis reports steadily improving results in first quarter 2005

Borealis continues to build on the successful implementation of its value creation strategy posting an operating profit of EUR 110 million for the first quarter of 2005. This compares favourably to the EUR 56 million achieved in the same quarter last year.

The first quarter was characterised by reasonable industry margins which, however, deteriorated towards the end of the quarter as a result of rising oil and feedstock prices. In line with overall market development, polyolefin sales quantities were down by six percent compared with the first quarter of 2004 adjusted for the divestment of Borealis’ Portuguese operations last quarter. Borealis confirmed its position as a leader in safety management by further improving its safety performance in the first quarter.

Net interest-bearing debt grew by EUR 89 million during the quarter as the company paid a dividend of EUR 60 million to its shareholders, the first dividend payment for three years. In addition, rising prices drove up the value of working capital, and additional inventory was built ahead of planned maintenance stops later in the year.

Borouge has been steadily increasing its Borstar® polyethylene (PE) capacity since it began operations in 2001 in Ruwais, United Arab Emirates. In the first quarter of 2005, Borouge successfully debottlenecked its existing Borstar PE capacity from 450,000 to 580,000 tonnes per year, and in doing so assumed full off take of the existing ethylene cracker.

Borealis also progressed its capital investment programme and is on track to complete a number of expansions during the year, including construction of a new 350,000 tonnes per year Borstar PE plant in Austria and the development of its Norwegian site.

New innovations launched this quarter include three new high-density PE fibre grades that allow customers to offer the fishing and agriculture industry stronger and lighter products. In the film sector, Borealis launched three new Borstar enhanced PE grades that in combination with single site grades offer superior stiffness, transparency, sealability and processability. This opens up new market areas for film customers and will add value throughout the whole value chain.

Concluding on the results of the first quarter, Chief Executive John Taylor stated, "We are confident that we can continue to deliver solid financial performance despite a fragile economic environment. We have a sound strategy focusing on key segments where we, in relationships with our customers, create high value plastics solutions that benefit consumers."
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