Borealis sees a strong start to 2016 with net profit of EUR 255 million

orealis has announced a net profit of EUR 255 mln for Q1-2016, compared to EUR 137 mln in Q1-2015. The improved result was driven by the very strong margins in the polyolefins business. The base chemicals business also saw an improved performance compared to the Q1-2015, while the contribution from Borouge was lower due to limited feedstock availability. In the first quarter, net debt increased by EUR 125 mln largely due to the payment of a EUR 425 mln dividend to Borealis’ shareholders. Despite the increase in net debt, Borealis’ financial position remains strong with a gearing of 22% at the end of the first quarter of 2016. Following the start-up of the Borouge 3 project in 2015, making Borouge the world’s largest integrated polyolefins complex, Borouge has now embarked on an optimisation programme across all sites. With the start-up of Borouge 3, the company has seen its production capacity more than double to 4.5 mln tons. The next step of this project will be the overall optimisation of the entire Borouge complex, including production, supply chain and sales. The only remaining Borouge 3 unit to be started up in Q2 of 2016 is the cross-linked polyethylene (XLPE) plant to bring the combined Borealis and Borouge annual polyolefins production capacity to 8 mln tons. In March, Borealis, Neste and Veolia announced the successful financial close of project to build a new combined heat and power plant in Porvoo, Finland, to match the energy needs of Neste and Borealis, and to be operated by Veolia. Neste and Veolia both own 40% of the power plant, Borealis owns 20%. The total investment value of this project is about EUR 400 million. Borealis also announced a new round of investments in its melamine and fertilizer production facilities in Linz, Austria. The heart of the so-called "Linz 2020" programme is a EUR 80 million investment package to boost the overall long-term competitiveness of the Linz location. The long-term ethane supply project of Borealis’ location in Stenungsund, Sweden, with ethane from the United States has reached a new milestone: on 3 May 2016, Navigator Gas and Borealis celebrated the naming ceremony of the vessel ‘Navigator Aurora’, the new 35,000 cubic metre state-of-the-art ethane vessel, in Shanghai, China. This vessel is among the most modern in the world and will ensure cost effective, safe and reliable transport of ethane to Borealis’ location in Stenungsund, Sweden. In the meantime, the currently ongoing, multi-million investment in the cracker upgrade and the construction of an ethane storage tank in Borealis’ location in Stenungsund is proceeding according to plan. The commissioning of a new unloading and storage facility will begin in the fourth quarter of 2016. “Borealis continues to benefit from its strategy of growing the three profit centres of polyolefins, base chemicals and Borouge,” comments Mark Garrett, Borealis Chief Executive. “The polyolefins business had an outstanding contribution in the first quarter supported by the strong polyolefins industry margin, resulting in significantly improved overall results for Borealis compared to the first quarter of 2015. The Borouge result in the first quarter was impacted by limited availability of feedstock, but the market conditions in Borouge’s core region remain strong. In the second quarter, Borealis expects yet again a solid result, albeit lower than the record second quarter of 2015. Both Borouge and the base chemicals business should see an improved profit contribution in the second quarter compared to the first, while we expect the polyolefins business to continue to perform well.”