Trading Statement Q2 2023 - INEOS Quattro Holdings Limited
INEOS Quattro Holdings Limited (‘INEOS Quattro’ or the ‘Group’) announces its trading performance for the second quarter of 2023.
Based on unaudited management information, INEOS Quattro reports that EBITDA for the second quarter of 2023 was €212 million, compared to €917 million for Q2, 2022 and €381 million for Q1, 2023. The second quarter results were adversely impacted by non-cash inventory holding losses of approximately €30 million (Q2, 2022: gains of €180 million) as a result of the large decline in raw material and product prices in the quarter.
Styrolution reported EBITDA of €32 million compared to €287 million in Q2, 2022. Polymer market demand was very soft due to general economic uncertainty and customers postponing orders. This was prevalent in all regions and industry sectors. High energy prices, inflation and increasing interest rates weakened overall market sentiment. Demand for durables reduced compared to the top of cycle conditions seen in 2021 and the first half of 2022. Styrene monomer sales reduced because of weak downstream demand. Market margins were at bottom of cycle for styrene monomer and Asia due to weak demand and additional capacity that came onstream in China. The second quarter result includes a non-cash inventory holding loss of approximately €17 million in Q2, 2023 due to a decrease in raw material prices towards the end of the second quarter compared to a gain of €75 million in Q2, 2022.
INOVYN reported EBITDA of €164 million compared to €344 million in Q2, 2022. The decrease in EBITDA was the result of general purpose PVC margin reductions and lower caustic soda pricing, partially offset by lower electricity and gas costs. European markets for general purpose PVC remained weak. Both sales volumes and spreads over ethylene have reduced in an environment of poor demand and ample supply. Global general purpose PVC export prices were also significantly lower than Q2, 2022 with reduced domestic demand in Asia and the US forcing low cost producers from these regions into export markets. Margins on specialty PVC remained healthy, albeit at lower levels than the comparative quarter. Demand for caustic soda, in a well-supplied European market, remained below historical levels resulting in further price erosion. The quarterly European contract price settled at €907/tonne in the second quarter of 2023 which was 21% lower than the comparative quarter. European energy markets have stabilised with electricity prices consistently trading at lower levels than the prior year, although prices are still high compared with the first half of 2021 and prior.
Acetyls reported EBITDA of €23 million compared to €137 million in Q2, 2022. In Europe, ongoing challenging economics and high inflationary pressures, as well as rising interest rates kept buying interest subdued. The US had the advantage of cheaper gas, but the market remained long in the quarter with downward pressure on the domestic acid price. In Asia, soft local demand remained with lower coal and methanol prices putting downward pressure on acetic acid prices.
Aromatics reported EBITDA of €(7) million compared to €149 million in Q2, 2022. Sales volumes were significantly lower in all regions in Q2 2023 compared to the same quarter last year, in part due to a planned turnaround outage in Zhuhai but mainly as a result of persistent soft demand for PTA in the West. Europe PTA sales increased over sequential quarters as the region became more competitive versus imports though not enough to reverse the falling global PTA demand trend. Unit margins in Q2, 2023 declined in the US as discounts to contract formula pricing increased to incentivize demand but rose in Europe versus baseline effects of a higher cost of production environment over the same time last year. Non-cash inventory holding losses of €13 million in Q2, 2023 were significantly lower than gains of €105 million in Q2, 2022.
Net debt was approximately €5,027 million on June 30, 2023. Cash balances at the end of the quarter were €2,139 million. There was availability under undrawn securitization facilities of €577 million. Net debt leverage was approximately 3.7 times EBITDA at the end of June 2023.