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Borealis realises improved net profit in the second quarter

  • Borealis announces a net profit of EUR 143 million for the second quarter of 2014
  • Borouge 3 start-up progressing well with the cracker fully operational
  • Borealis and SKW Stickstoffwerke Piesteritz to continue their cooperation at Borealis’ melamine production location in Piesteritz, Germany
  • In August, Borealis announced 10-year agreement with Antero Resources to supply ethane from the US 
Key figures and ratiosQ2 

2014

Q2 

2013

H1 

2014

H1 

2013

Net SalesEUR Million2,0911,9764,3473,955
Net ProfitEUR Million14383245144
Reduction / (increase) in
net interest-bearing debt
EUR Million(58)(154)(169)(327)
Gearing%48%50%

Borealis, a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers, recorded a net profit of EUR 143 million in the second quarter of 2014, compared to EUR 83 million in the same quarter of 2013. The improved result is a reflection of stronger margins for the polyolefins business while the fertilizer business was impacted by the turnaround in Grand-Quevilly, France. Borouge, Borealis’ joint venture in Abu Dhabi, continued to deliver a strong result, which was up in the second quarter of 2014 compared to the second quarter of 2013. The improved result of Borouge comes as start-up activities of the Borouge 3 project are ongoing.

Net debt increased by EUR 58 million in the second quarter of 2014 largely due to an increase in working capital needs. Borealis’ financial position remains strong with financial gearing of 48% at the end of the second quarter.

Borouge 3 start-up in full swing

Borouge has successfully started up its third ethane cracker as part of the company’s Borouge 3 expansion and has been producing on-spec ethylene since the middle of June. The cracker has an annual ethylene production capacity of 1.5 million tonnes. The two Borstar polyethylene, the low density polyethylene as well as the two Borstar polypropylene plants will start up sequentially in the coming period.

Strategic decisions to remain strong in Europe

Borealis and SKW Stickstoffwerke Piesteritz GmbH have reached an agreement regarding the continuation of their cooperation at Borealis’ Melamine production location in Piesteritz, Germany. New contracts for the delivery of urea, other essential raw materials and energy, as well as related services, were signed in June. The contracts will come into effect in January 2015.

In June, Borealis announced the divestment of its joint-ownership share in the Le Havre urea production plant and related ammonia storage facility at Gonfreville l'Orcher, France. Following the divestment, the plant and related storage facility will be fully owned by Yara France, who already owns the remaining share and operates these facilities. The divestment will not have an impact on Borealis employees.

Beyond the second quarter 2014 - capturing strategic opportunities

On August 7, Borealis signed an agreement with DuPont Holding Netherlands to purchase the company’s 67% shareholding in Speciality Polymers Antwerp. The company, located in Zwijndrecht (Antwerp, Belgium), is a joint venture between DuPont (67%) and Borealis (33%) and primarily manufactures ethylene acrylates copolymers and ethylene vinyl acetate (EVA).

On August 7, Borealis also announced the signing of a 10-year agreement with US-listed Antero Resources to supply, on an annual basis, 240,000 tonnes of ethane from the United States for its flexible steam cracker in Stenungsund, Sweden. A related long-term shipping agreement was signed with US-listed Navigator Holdings, who will build a new, 35,000 cbm state-of-the-art ethane vessel to ensure cost effective, safe and reliable transport of ethane to Stenungsund. The ethane supply coming to Stenungsund by ship will be stored in a purpose-built, fully refrigerated ethane tank. An amount of EUR 120 million will be invested in the Stenungsund location, including the upgrade of the cracker.

“In an increasingly challenging environment in Europe, we continue to capture opportunities along the whole value chain,“ says Mark Garrett, Borealis Chief Executive. “With the recent agreement to acquire full ownership of Speciality Polymers Antwerp in Belgium, we are adding acrylate copolymers to our portfolio, an important building block for our value-added products in the energy and infrastructure segment. On the supply side, the agreement with US-based Antero Resources to deliver ethane to our flexible cracker in Sweden will enable us to take advantage of the significant shift in ethane availability triggered by the US shale gas boom and strengthen our monomer position in Europe.”

Outlook

“The improved results in the second quarter and first six months reflect better margins in the polyolefins industry as well as our ongoing efforts to improve efficiency, plant operability and commercial excellence,” continues Garrett. “Although there is still much work to do, we are well on track to achieve full operation of the Borouge 3 expansion through the end of this year, with the successful cracker start-up in June as a key first step.”

END

For further information please contact:

Kerstin Meckler
Director Communications, Borealis Group
Tel. +43 (0)1 22 400 389 (Vienna, Austria)
e-mail: kerstin.meckler@borealisgroup.com

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