Trading Statements

INEOS Enterprises Holdings Limited Unaudited Interim Trading Statement Q4-2019


INEOS Enterprises Holdings Limited (INEOS Enterprises) reports its trading performance for the fourth quarter 2019.

Based on unaudited management information, INEOS Enterprises EBITDA before Special Items (EBITDA) for the fourth quarter 2019 was €84 million. The fourth 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 €72 million for the fourth quarter 2018 with the growth driven primarily by Composites year on year. Full Year 2019 EBITDA was €332M compared to a proforma result of €333M for 2018.

In Q4 the Pigments business EBITDA was €36M compared to €37M in Q3 and €40M in Q4 2018. The results benefited from stronger revenue from a better customer mix offset somewhat by a typical seasonal fall in volumes. Full Year Proforma EBITDA for 2019 was €159M compared to €157M for Full Year 2018.  

In Q4 the Composites business EBITDA was €29M compared to €25M in Q3 and €24M in Q4 2018. This was an encouraging finish to the year following strong sales in vinyl epoxy resins in EMEA. Demand in North America was down a little on expectations, with a more stable picture in China ahead of the

New Year seasonal slowdown. Full Year Proforma EBITDA for 2019 was €106M compared to €82M for Proforma 2018. Although some margin pressure continues, prices have remained fairly stable and costs under control. Our outlook remains positive into the New Year for continued growth across all regions.

In Q4 the Solvents business EBITDA was €11M which includes the Ashland BDO business for a full quarter compared to €3M in Q3 and €9M in Q4 2018. Full Year Proforma EBITDA for 2019 was €42M compared to €67M for

Proforma 2018. The result was a significant uplift from the third quarter mainly due to a better quarter for BDO following the shut down in July. Demand for IPA continues to be weak but offset by a stronger quarter for MEK and Ethanol despite a planned outage in MEK in December.

In Q4 the Chemical Intermediates sector EBITDA was €8M compared to €5M in Q3 and €1M in Q4 2018. Full Year Proforma EBITDA for 2019 was €25M compared to €27M for Proforma 2018. Q4 showed a much-improved performance versus Q3, with Calabrian and Joliet driven by improved reliability and additional volume upside. Sulphur Chemicals and Compounds remained stable and in line with expectations.

During Q4 INEOS Enterprises delivered cost savings of approx. €33M mainly relating to the Joliet business where various manpower and non-manpower savings have been realised in addition to a general reduction in corporate overheads compared to historic levels. Cost saving initiatives are underway in Composites, Pigments and BDO although initially these are limited to changes resulting from the removal of spending authority and changes to SG&A organisations. All of these businesses have further projects throughout Q1 and Q2 2020, looking at the manufacturing organisation and deep dives into non-manpower fixed costs. We remain confident of not only meeting our targeted cost savings but exceeding them. At Joliet, we expect to deliver in excess of €32M of annual run rate cost savings, compared to our initial expectations of €23M.

Net debt was €1.2Bn at the end of December with cash balances of €267M. This represents gross leverage of 3.5x, but proforma for expected annual run rate cost savings, underlying leverage is around 3.0x.