Trading Statements

Trading Statement Q1 2020 - INEOS Styrolution Holding Limited

INEOS Styrolution Holding Limited (‘INEOS Styrolution’) reports its trading performance for the first quarter of 2020.

Based on unaudited management information INEOS Styrolution reports an EBITDA before Special Items (‘EBITDA’) for the first quarter of 2020 of €138 million, compared to €198 million in Q1-2019 and €123 million in Q4-2019. The first quarter results were adversely impacted by non-cash inventory holding losses of €25 million (Q1-2019: €14 million) as a result of the large decline in crude oil and product prices in the quarter.

Our Q1-2020 trading results reduced compared to Q1-2019 as overall sales volume decreased in Styrene and Polystyrene mainly because of weaker demand and COVID-19 effects in Asia. ABS Standard and Specialties sales were in line with Q1-2019 with lesser effects from the COVID-19 pandemic.

Governments around the world, including Europe and the U.S., have recognised that chemicals are an essential industry. INEOS Styrolution’s contributions to the healthcare industry and to food packaging are recognised as ‘system critical’. All of our assets and sites, other than India and the plants in regular maintenance turnarounds, remain operational, with measures in place to secure continuing safe operations.

In the first quarter of 2020, the Polystyrene EBITDA was €34 million (Q1-2019: €55 million). Our sales volumes in Polystyrene decreased compared to last year due to a very competitive market environment in the Americas and EMEA. Customers delayed orders anticipating lower sales prices as raw material prices significantly reduced. In addition, COVID-19 effects curtailed sales in China. The weaker demand also reduced margins.

ABS Standard EBITDA in the first quarter of 2020 was €24 million (Q1-2019: €28 million). Market demand increased in the first quarter of 2020 and sales volume were close to the first quarter of 2019. Market margins improved in Asia as demand recovered. Arbitrage from Asian products affected both the Americas and EMEA region. As a result, margins and EBITDA in these regions reduced.

The Specialties business reported a strong EBITDA of €58 million in the first quarter of 2020 (Q1-2019: €50 million). The Company has a good geographical and industry spread which supports sales. Margins improved compared to the same quarter in 2019 as feedstock prices declined and quarterly sales prices were fixed.

Styrene Monomer reported a Q1-2020 EBITDA of €22 million (Q1-2019: €66 million). Trading conditions were weak as new capacity came on-stream during the quarter in China. Styrene sales declined because as downstream demand was soft. Oil and derivative product prices sharply decreased towards the end of the quarter, which led to negative inventory holding losses. Our Texas City plant is in scheduled turnaround since mid-February.

INEOS Styrolution has implemented a number of measures to conserve cash during this uncertain period and has implemented policies to control all discretionary fixed costs. Management has reviewed all capital projects and taken decisions to defer or reduce discretionary expenditure where it is safe to do so. In addition, INEOS Styrolution has applied for corporate tax refunds and deferrals where available

INEOS Styrolution has continued to maintain its focus on cash management and liquidity. Net debt was €1.073 million at the end of March 2020. Cash balances at the end of the quarter were €312 million, and availability under the undrawn credit facilities was €396 million. Net debt to LTM EBITDA leverage was 1.7 times. In the first quarter of 2020 INEOS Styrolution paid a dividend of €355 million to its parent company.