Borealis reports third quarter profit

In the context of strong polyolefin market demand, lower polyolefin prices and higher feedstock costs Borealis achieved an operating profit of EUR 7 million and a net profit of EUR 3 million in the third quarter. Borealis’ volumes were up 12% from the second quarter and increased 19% compared to the third quarter of 2002. Due to the squeezed industry margins the results were well below the EUR 54 million operating profit and EUR 25 million net profit for third quarter last year.

Operating profit was influenced by lower fixed costs than the corresponding period a year ago, reflecting staff reductions and other cost savings. The continuing implementation of the transformation programme and recently initiated profit improvement plans at some manufacturing sites will continue to strengthen Borealis’ competitive position.

Third quarter net profit was positively impacted by encouraging results in Borouge, the joint venture between Borealis and the Abu Dhabi National Oil Company (ADNOC), included in results from associated companies. The positive contribution from Borouge is driven by steady growth in Borstar polyethylene sales in the Middle East and Asia coupled with good operational performance.

Borealis reported an increase in net interest-bearing debt of EUR 12 million during the third quarter. Gearing was reduced to 84% compared to 86% a year ago. Borealis is continuing its emphasis on strict control of working capital and capital expenditure.

Borealis achieved an increase in its European polyethylene and polypropylene prices as of September. “Price increases are required to restore profitability to our European business, and to sustain our ongoing investment in innovation and technology”, says Chief Executive John Taylor. “These measures are essential to support the continued growth of polyolefins as a material of choice in our daily lives. We cannot rely solely on continued cost reductions to recover profitability.”

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