Trading Statements

INEOS Enterprises Holdings Limited Unaudited Interim Trading Statement Q1-2020

INEOS Enterprises Holdings Limited (INEOS Enterprises) reports its trading performance for the first quarter 2020.

Based on unaudited management information, INEOS Enterprises EBITDA before Special Items (EBITDA) for the first quarter 2020 was €87 million. The first quarter result includes all segments on an as reported basis and does not include any proforma adjustments for acquisitions in the period. This compares to a pro-forma EBITDA of €88 million for the first quarter 2019. Last Twelve Months Q1 2020 EBITDA was €331M compared to €332M for Full Year 2019.

The quarter saw some weakness, mainly in Asia, as the current COVID-19 virus pandemic started to have an impact on demand. The chemical industry is deemed as essential, critical infrastructure by governments across the world. All the Group’s sites have therefore continued to operate fully during the current crisis. On the demand side, we have continued to experience strong demand for products which flow into medical applications.

In Q1 the Pigments business EBITDA was €35M compared to €36M in Q4 2019 and €38M in Q1 2019. The results benefited from stronger sales into the plastics and paper sectors offset by some weaker volumes into the coatings sector especially towards the end of March. Margins were down slightly from some expected increases in feedstock prices.

In Q1 the Composites business EBITDA was €31M compared to €29M in Q4 2019 and €27M in Q1 2019. There was an encouraging start with margins supportive in North America and EMEA, and a good start on fixed cost programs in both regions. China volumes were strong ahead of the New Year seasonal slowdown, which was then offset by the prolonged lockdown, before rebounding to prior year levels. Demand in EMEA and North America was impacted towards the end of March as governments imposed the wider lockdowns in these regions.

In Q1 the Solvents business EBITDA was €14M compared to €11M in Q4 2019 and €14M in Q1 2019. The result continues an improving trend in Solvents. The business benefited from strong medical and sanitising demand as a result of the COVID19 pandemic especially into March, offset by an unplanned outage on our MEK unit in February.

In Q1 Chemical Intermediates EBITDA was €7M compared to €8M in Q4 2019 and €8M in Q1 2019. Q1 showed some improvement in Sulphur Chemicals driven by some export opportunities in the quarter. Calabrian saw some weaker volumes in liquids, but broadly results are in line with expectations. Compounds and Joliet remained stable and in line with expectations.

During Q1 INEOS Enterprises delivered further cost savings of approx. €6M bringing cumulative cost savings to date of approx. €50M. In the Quarter, these largely relate to the run rate delivery in the Joliet business and the start of initiatives in Composites. Our plans in Composites are well progressed with manpower reductions being rolled out in the manufacturing and SG&A organisations. We are also progressing our deep dive into non-manpower fixed costs to further underpin the savings we are seeing from the elevation of spending authority. We have commenced similar reviews in Pigments and BDO. We continue to remain confident of not only meeting our targeted cost savings but significantly exceeding them, with 2020 exit run-rate savings of approx. €75M being identified already.

Net debt was €1.1Bn at the end of March with cash balances of €254M. Our €300M Securitisation facility was also repaid in the quarter and remains undrawn at the end of March. Gross leverage is 3.4x, but proforma for expected annual run rate cost savings, underlying leverage is around 3.0x. Capital expenditure during Q1 was €9M.