Nova reports a loss of US$105 mln in Q3 2005

20-Oct-05

Nova Chemicals Corp. has reported a Q3 loss of US$105 million. This loss can be attributed to one-time hits from raw material supply disruption and a write down on a European joint venture that is cutting capacity to reduce operating costs. Despite the bad results, Nova beat expectations and has a positive outlook as the market has turned the corner. Hurricanes Katrina and Rita have hindered oil production and refining of raw materials used by Nova but increased demand and margins for its products. Nova seems well poised to exploit the market opportunities. With key operations located in Canada, Nova has benefited from recent hurricane-related production outages in a market that was already strengthening due to depleted stockpiles and robust demand. Nova also pays less for domestic raw materials than competitors who rely on Gulf Coast suppliers. Earlier this month, it was announced that Nova Innovene, a joint venture with BP's Innovene petrochemical subsidiary, will cease expandable polystyrene production in Berre, France and close an idled expandable polystyrene plant in Carrington, U.K. The two shutdowns remove nearly 30% of Nova Innovene's total expandable polystyrene capacity and more than 10% of Western European industry capacity. These shutdowns will deliver a minimum of US$40 million in cost reductions.