Borealis reports second quarter profit in weak market

Borealis today announced its second quarter result, showing an operating profit before restructuring charges of EUR 21 million and a net profit of EUR 4 million after tax.

Operating profit before restructuring charges increased to EUR 21 million from EUR 5 million in the first quarter, but was well below the EUR 78 million in the second quarter of 2002. The result versus the same quarter last year mainly reflects the impact of industry sales volumes down by 9% and higher feedstock costs.

Net interest bearing debt decreased by EUR 15 million in the second quarter mainly due to continued emphasis on controlling working capital and capital expenditures. Gearing was reduced to 85% compared to 96% a year ago.

“In the second quarter we saw polyolefin prices collapse at an alarming rate, squeezing our margins as feedstock costs remained high,” says Chief Executive John Taylor. “We expect the challenging business environment to continue throughout 2003 but are confident that the continuing implementation of our transformation programme will further strengthen Borealis’ competitive position and financial performance. The recent announcement to invest EUR 200 million to expand our Borstar polyolefin capacity in Austria emphasises Borealis’ continuing commitment to create value for our customers and owners.”

In July Borealis announced a EUR 200 million investment in a new 350,000 tonne per year polyethylene plant, based on its proprietary Borstar technology, and a 90,000 tonne per year expansion of the existing Borstar polypropylene plant at its petrochemical site in Schwechat, Austria. When the new capacity comes on stream in 2005 it will become a world class competitive site with an annual polyolefin capacity of around 1 million tonnes.