Polyolefins Record Result for Borealis in the Second Quarter of 2015
Borealis, a leading provider of innovative solutions in the fields of polyolefins and base chemicals announces a net profit of € 351 million for the second quarter of 2015, compared to € 143 million in the same quarter of 2014. The strong result reflects improvements in all three profit centers of Borealis, particularly the polyolefins segment.
Vienna/Austria – In the second quarter net debt reduced by € 69 million due to the solid business performance. Borealis’ financial position strengthened further with financial gearing of 31% at the end of the second quarter.
In the second quarter of 2015, integrated polyolefin producers saw strong industry margins. Despite lower feedstock costs, polyolefin prices did not retreat driven by a tight market as a result of solid demand combined with a supply shortfall. In addition, imports of polyolefins into Europe have been uncompetitive following the weakening of the Euro. However, in the first quarter of 2015, the falling monomer prices did cause large negative inventory effects for polyolefin producers.
Borouge, Borealis’ joint venture with the Abu Dhabi National Oil Company in Abu Dhabi, UAE, continues the successful start-up of the mega project Borouge 3. In April, the low density polyethylene plant (LD1) had a smooth start-up. With this start-up, all five polyolefin plants are now running as planned. The only remaining unit to be started-up is the cross-linked polyethylene (XLPE) plant which is scheduled towards the end of 2015 and will complete the start-up of the Borouge 3 mega project.
Borouge 3 will deliver an additional 2.5 million tonnes of capacity when fully ramped up, bringing the total Borouge capacity to 4.5 million tonnes, thus making Borouge the biggest integrated polyolefins complex in the world. Borealis and Borouge will then have approximately 8 million tonnes of polyolefin capacity.
Investing in Europe
In July, Borealis announced a € 160 million investment in its production location in Stenungsund, Sweden. The investment entails the upgrade and revamp of four cracker furnaces to the highest currently available standards in process safety and energy efficiency. The Stenungsund programme is scheduled to begin in late 2016 and be completed by 2020.
“The record result in the second quarter came on the back of a very favourable polyolefin market,” says Mark Garrett, Borealis Chief Executive. “While pleased with the result, we faced a number of production interruptions in the second quarter, causing issues in the supply chain. For this reason operational excellence remains a key focus for the company. Despite an overall lower price environment compared to 2014, 2015 presents industry margins for the polyolefins segment not seen since 2007. Borealis is well positioned to take advantage of this opportunity as it has upgraded its European asset base and grown through the Borouge expansions over the past several years.”