Borealis has announced a net profit of €200 million (approx. £171 million) for the first quarter of 2019, compared to €240 million (approx. £205 million) in the same quarter of 2018.
The deterioration in profit compared to the first quarter of 2018 was driven by lower European integrated polyolefin margins than in the same period of 2018.
The company says the contribution from Borouge in the first quarter of 2019 was below the same period in 2018, mainly due to the Borouge three turnaround and weaker polyolefin sales prices in Asia.
The contribution from the Fertilizer business improved compared to the first quarter of 2018, driven by an improved operability of the assets and an improved fertilizer market environment.
In the first quarter, net debt increased by €429 million (approx. £367 million), largely due to the payment of a €400 million (approx. £342 million) final dividend payment over 2018 to Borealis' shareholders. In September 2018 a €300 million (approx. £256 million) interim dividend was already paid for 2018.
Borealis
Alfred Stern CEO
A second main factor leading to the increased debt position was the implementation of the new accounting standard for lease contracts (IFRS 16) impacting the reported debt by €210 million (approx. £179.6 million).
The cash inflow from the solid business result and dividends from Borouge allowed Borealis’ financial position to remain strong, with a gearing of 28 per cent at the end of the first quarter of 2019.
“While the European integrated polyolefins industry margin remained firm in the first quarter of 2019, the outlook on the full year remains uncertain, being driven by the looming risk of an economic slowdown as well as increased geopolitical uncertainty,” said Alfred Stern, Borealis CEO.
“The Borouge result in the first quarter was solid, but was of course impacted by the Borouge 3 turnaround. The continued strong financial performance delivered last year and Borealis’ excellent financial position has enabled us to pay a total dividend of EUR 700 million to our shareholders for the business year 2018.”
“In the second quarter, Borealis expects a stronger result supported by the polyolefins business. Borouge is also expected to perform well after the successful completion of the Borouge 3 turn-around. Our focus in 2019 shall remain on driving top performance of our existing business and on advancing the major global growth projects.”