Borealis, a leading provider of innovative solutions in the fields of polyolefins and base chemicals, announces a net profit of €313 million for the first quarter of 2017, compared to €255 million in the same quarter of 2016. The strong result was driven by continuing high margins in the polyolefins business and by an improved contribution from Borouge. The contribution from Base Chemicals was lower compared to the first quarter of 2016, as a result of a more difficult fertilizer market environment.
Net debt increased by €619 million in the first quarter, largely due to the payment of a €750 million dividend to Borealis’ shareholders. Despite the increase in net debt, Borealis’ financial position remains strong, with a gearing of 21% at the end of the first quarter 2017.
Borealis and NOVA Chemicals Corporation ("NOVA Chemicals") signed a preliminary agreement to form a joint venture (JV) with Total Petrochemicals and Refining USA, Inc. ("Total"). Key aspects of the JV will include building a new 1,000 kilotonnes per annum (ktpa) ethane cracker in Port Arthur, Texas and a new 625 ktpa Borstar® PE plant in Bayport, Texas. It will also include owning and operating Total’s existing Bayport polyethylene (PE) facility, with a total capacity of 400 ktpa.
The JV is expected to be established in late 2017 and the final investment decision on the Borstar PE plant will be taken at the same time. The ethane cracker and Borstar PE plant are planned to start-up in late 2020. The JV will create significant synergies by enabling both a strong integration of the value chain as well as the first-time use of the proprietary Borstar PE process technology in the Americas. It will also provide competitive export access to markets outside of North America and help meet the growing global demand for PE.
Borealis and Borouge announced a new world record of 640 kilovolt (kV) for extruded high voltage direct current (HVDC) cable technology. As a global leading innovator, Borealis builds on over 15 years of operational experience in extruded HVDC materials and on its proprietary Borlink™ technology, to set ever higher standards in proven system performance. This new step-change in electrical performance and record-breaking voltage level has been made possible through the unique properties of tailored polymers based on Borlink, in combination with the high levels of chemical and physical cleanliness of these compounds.
"Borealis continues to benefit from the strong polyolefins industry margin supporting the polyolefins business profit contribution", comments Mark Garrett, Borealis Chief Executive. "The Borouge result in the first quarter was firm but was impacted by the limited availability of feedstock. All in all our excellent financial performance has also allowed us to return cash to our shareholders, via a EUR 750 million dividend, probably a record in Austrian industrial history."
"In the second quarter, Borealis expects another solid result. The fertilizer market conditions are improving and we expect the polyolefins business and Borouge to continue to perform well. The main challenge going forward this year will be the successful execution of a record number of planned turnarounds, involving multiple locations."