Borealis continues to invest in the future

Borealis today announced the financial results of the first quarter, reporting an operating profit of EUR 36 million. The result was adversely impacted by provisions related to the recently announced decision to close a 110,000 tonnes high density polyethylene unit in Norway, consistent with Borealis’ strategic direction and further improving overall competitiveness. The results were also affected by an additional insurance premium surcharge arising from heavy losses suffered by the insurance industry.

Key figures and ratios (Quarter ending March 31, 2006)		1Q 2006	1Q 2005	4Q 2005	1-4Q 2005
Sales revenue	EUR M	1,332	1,144	1,264	4,814
Operating profit / (loss)	EUR M	36	110	45	236
Net profit / (loss) after tax	EUR M	31	84	52	226
Reduction / (increase) in net interest- bearing debt	EUR M	(79)	(89)	(29)	(110)
Gearing	%	49	44	44	44

Strengthening innovation capability

Borealis recently announced its decision to develop the Innovation Centre in Linz, Austria into the centre of its international research activities. This will include significantly increasing the number of employees at the Centre and investing EUR 25-30 million in facilities over the next five years. The decision is part of a broader agreement with the government of Upper Austria to invest around EUR 19 million by 2011 in strengthening Upper Austria as a plastics industry research hub. In close cooperation with Johannes Kepler University and Wels Advanced Technical College, this commitment will lead to enhanced educational activities and general facilities. An additional investment of EUR 6-7 million in 2006 by Borealis was announced for improvements at our Innovation Centre in Finland. Plans were also revealed regarding the creation of an Innovation Centre in Abu Dhabi as part of the continued growth and success of Borouge, our joint venture with the Abu Dhabi National Oil Company (ADNOC).

Net interest-bearing debt increased EUR 79 million during the quarter influenced by higher working capital values resulting from higher prices and sales volumes as well as a EUR 45 million dividend payment.

Commenting on the performance, Chief Executive John Taylor said:

“In a quarter characterised by further rises in feedstock and energy prices combined with volatile demand patterns, we successfully commercialised the capacity expansions completed last year strengthening our overall European market position. In this context, we continue striving to increase our plastics prices to maintain profitability.”