Trading Statements

INEOS Enterprises Holdings Limited Unaudited Interim Trading Statement Q3-2020

INEOS Enterprises Holdings Limited (“INEOS Enterprises”) reports its trading performance for the third quarter 2020.

Based on unaudited management information, INEOS Enterprises’ EBITDA before Special Items (“EBITDA”) for the third quarter 2020 was €92M. This compares to a pro-forma EBITDA of €71M for the third quarter 2019 and €117M in the prior quarter. Last Twelve Months pro-forma Q3 2020 EBITDA was €381M, compared to €332M for Full Year pro-forma 2019 and Q2 2020 LTM of €359M.

As a result of the product diversification across the Enterprises group, we are delighted to report another very strong quarter of results despite a backdrop of Covid-19 headwinds. Our results continue to be ahead of expectations and encouragingly, we are seeing strong indicators of further recovery across many of our businesses and products.

We continue to be mindful of the risks that Covid-19 presents to our employees and the Business. All our sites remained operational throughout the quarter. In line with our focus on health and safety, we continue to implement Covid compliant protocols across our sites, both manufacturing and office based. We have also continued to be prudent in our approach to control discretionary fixed costs and keep capital expenditure to essential items only.

In line with the prior quarter, we continue to be focussed on maintaining an adequate liquidity position with control over our cost base. Our liquidity position at the quarter end was strong, with cash balances available of €403M and no drawings under our €300M securitisation facility. Since the end of the quarter we have repaid 120M of our shareholder loan. Pro forma for this repayment, net debt was €1,085M at quarter end, resulting in net leverage of c.2.8x.

During this quarter, INEOS Enterprises delivered additional cost savings of c.€13M, bringing cumulative cost savings in our acquired businesses to date of c.€72M. These savings represent underlying changes to operating cost base and do not include any temporary effects from Covid-19 operating procedures.

In Q3 Solvents’ EBITDA was €23M, compared to €3M in Q3 2019 and €65M in Q2 2020. This result continues the trend seen through this year with IPA and Ethanol being key components for sanitisation end markets. Margins remain strong, especially compared to the same period as last year and were assisted by low feedstock prices throughout the quarter. As expected, we experienced a reduction in volumes and prices vs. Q2 as customers looked to destock following the surge in demand earlier in the year, although we saw an increase in demand trend towards the end of the quarter.

Composites’ Q3 EBITDA was €35M, compared to €25M in Q3 2019 and €19M in Q2 2020. Composites benefitted from the recovery in the US market throughout the quarter, with EMEA also showing strong signs of recovery through the quarter. There was a strong margin performance from the division, driven by the underlying improvements in demand and lower raw material costs. In line with the recovery of the construction sector, we saw an increase in sales vs. prior quarters.

Pigments reported Q3 2020 EBITDA of €33M, compared to €37M Q3 2019 and €29M in Q2 2020. Pigments saw slightly lower volumes and margins through the key application period in North America. However, exit volumes in the quarter are improving in the North American and South American markets as we move into the application season in South America. The business continued to be supported by stable demand in the plastics and home improvement markets during the quarter.

Chemical Intermediates reported Q3 2020 EBITDA of €6M compared to €5M in Q3 2019 and €7M in Q2 2020. Sulphur businesses were supported by stable volumes into water treatment. INEOS Joliet has seen recovery in volume given their links with our Composites business and Compounds has also demonstrated recovery linked to the UK construction sector. Our Joliet plant had a planned turnaround in the quarter, timed to coincide with the lock closure and maintenance, which negatively impacted results for Q3.

We continue to invest in assets and headcount in the start-up of our Hygienics business as we move towards establishing a stand-alone retail brand and are encouraged by the growth we are seeing in this opportunity in only a few months. In this quarter the business won a number of significant sales opportunities that will generate revenue in future periods. In the quarter the EBITDA of the division, including marketing costs, was €(6)M.