Borealis posts Q1 net loss; witness 54% quarter-on-quarter improvement

Borealis, a leading provider of innovative, value creating plastics solutions, posted a net loss of EUR 56 mln for Q1 - 2009, a 54% improvement compared to the Q4 - 2008 as the company quickly reacts to the most significant global demand shock in decades. The company posted EUR 130 mln net profit in the same period a year ago. The company indicated that the quarter saw slight recovery in polyolefin sales volumes and prices amid tough trading conditions. Results were negatively impacted by the high inventory impairment costs in Q4 - 2008 which was largely cleared in the Q1 - 2009. This effect contributed to a majority of the operating losses in the quarter. The contribution of Borouge was soft during the first quarter, partly due to a scheduled maintenance shut down. Mark Garrett, Borealis Chief Executive commented, "After a dramatic drop in demand, the world economy has stabilised at a low level. We do not expect real demand to recover before the end of 2010." Focused working capital management contributed to a net debt reduction of EUR 98 mln versus the end of the Q4 - 2008 and an improved gearing ratio of 43%, from 47% at the end of the Q4 - 2008. In April, Borealis announced that Borouge 3 has entered the engineering and design stage and will come on stream at the end of 2013, adding another approximately 2.5 mln tpa of polyolefins capacity. This project is a further expansion of Borealis' joint venture with ADNOC (Abu Dhabi National Oil Company) in Abu Dhabi to meet the growing demands of the high value polyethylene (PE) and polypropylene (PP) markets in the Middle East and Asia and will specifically add low-density polyethylene (LDPE) capability for the growing wire and cable market to Borouge's portfolio. Other ongoing projects include Borealis' 350,000 tpa low-density polyethylene (LDPE) plant in Stenungsund, (Sweden) which is expected to complete by 2009 end and expansion of its international Innovation Headquarters in Linz (Austria).
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