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INOVYN Q1 2018 Trading Statement

Q1 2018 Preliminary Trading Statement

INOVYN Limited announces its preliminary trading statement for Q1 2018.

Based on unaudited management information, INOVYN Limited reports that EBITDA for the first quarter of 2018 was €188 million. This represents the second highest quarterly EBITDA performance since the formation of INOVYN, and compares to €142 million for the same period last year. On a last twelve month basis, EBITDA now stands at €714 million. The strong financial performance is driven by record prices of caustic soda, which more than offset lower caustic soda volumes and a slight fall in overall PVC margins.

Capital expenditure for the first quarter was €37 million.

The first quarter performance

Total sales volumes across all of our products for the first quarter were lower when compared to the same period in 2017, although most of the decrease is a result of the closure of the Group’s last mercury cell room at Martorell, Spain in December 2017. The average capacity utilisation rate of the Group’s plants remain high and above the European industry average.

The European SPVC market was negatively influenced by the cold weather during the first quarter of 2018 and as a result total sales volumes of General Purpose PVC were marginally lower than in the first quarter of 2017. Average prices for General Purpose PVC were slightly lower than both the same period last year and the previous quarter. Ethylene contract prices (as reported by IHS Markit) averaged €1,064 per tonne for the first quarter of 2018, compared to €1,018 per tonne over the same period last year, and €1,036 per tonne in the final quarter of 2017. However, General Purpose SPVC margins over ethylene (using ratio of 50% ethylene per tonne of PVC) in European markets were marginally higher than the same period last year, but the Group’s overall average spread decreased due to lower margins on exports. The Group’s Speciality PVC portfolio continues to grow and margins remain attractive.

Caustic soda demand in the first quarter of 2018 was slightly higher than the same period last year but volumes sold were lower due to the cell room closure at Martorell. Caustic soda selling prices reached another record high in the first quarter of 2018.  As a consequence, total caustic revenues were higher than the previous year despite the lower volumes. Average energy costs remain at relatively low levels. Consequently, caustic soda margins over energy were higher than the previous quarter and were significantly higher than the first quarter of last year.

Net cash flow from operating activities was an inflow of €97 million for the quarter, with €188 million of EBITDA being reduced by €54 million of corporate tax payments, and net working capital outflows and pension payments. Interest of €4 million on the Senior Secured Term Loans was paid in the quarter, and €7 million of Term Loan A amortization was paid. The amount of cash and cash equivalents at March 31, 2018 was €169 million and no amounts had been drawn down against the Group's €300 million Receivable Securitisation Facility. Net debt was approximately €764 million at March 31, 2018, compared to €818 million at December 31, 2017 and net debt leverage was approximately 1.1 times.

ENDS