Trading Statements

Q1, 2010 Trading Statement

INEOS Group Holdings PLC (‘IGH’ or ‘INEOS’) confirms a strong improvement in trading performance in the first quarter of 2010.

Based on management information INEOS reports that Historical Cost EBITDA (‘HC EBITDA’) for the first quarter of 2010 was €494 million, compared to €201 million for Q1, 2009 and €294 million for Q4, 2009.  Consolidated revenues were €5.6 billion compared to €3.8 billion in Q1, 2009.  Refining inventory holding gains amounted to €20 million in the quarter, reflecting the increase in crude oil prices over the period.  Combined Replacement Cost EBITDA for Refining and Historical Cost EBITDA for Chemicals (‘RC/HC EBITDA’) was €474 million for the quarter, compared to €154 million for Q1, 2009 and €267 million for Q4, 2009.  The Group has seen record levels of profitability across its chemical businesses in the month of March.  Total RC/HC EBITDA was €230 million for the month, more than double the same time last year.  The Group now uses RC/HC EBITDA to measure its compliance with the financial covenants under its senior banking facility.

Chemical Intermediates reported HC EBITDA of €286 million compared to €60 million in Q1, 2009.   Demand for chemical intermediates has been strong across all sectors and all regions.  Utilisation rates in the Nitriles and Phenol businesses were at their maximum levels.  The market for acrylonitrile has been very tight and margins have reached new highs. Phenol has seen higher margins with strong demand in China, a good market in Europe and improving domestic demand in the US. Underlying demand for Oligomers continued to improve in the quarter.  The Oxide business continued to benefit from strong demand for its derivative products.

O&P Europe reported HC EBITDA of €69 million compared to €6 million in Q1, 2009.  Demand for olefins was strong, with propylene being especially tight in the quarter.  Demand for polyolefins continued to improve.  The market for PP and LDPE was tight with domestic demand exceeding capacity as the main European economies continued to recover.  This also enabled some improvements in margins to be made. 

O&P North America reported HC EBITDA of €101 million compared to €36 million in Q1, 2009. The business has continued to benefit from its flexibility to be able to utilise cheaper gas feedstocks to improve margins.  Cracker utilisation in the US was well above the industry average for the quarter.  The market has been tight with improving domestic demand as well as industry turnarounds impacting the supply side.

Refining reported HC EBITDA of €38 million compared to €99 million in Q1, 2009. Inventory holding gains amounted to €20 million in the quarter compared to €47 million in Q1, 2009.  Market demand for refining products continued to improve during the quarter compared to Q4, 2009.  Refining margins have improved, partly as a result of lower industry inventory levels and the current refinery turnaround season in Europe restricting supply. The floating inventory storage of middle distillates has now been consumed due to the cold weather across Europe during the quarter.  The hydrocracker unit in Lavera had a scheduled turnaround in March 2010.

The Group has continued to focus on cash management and liquidity.  Net debt was approximately €7.1 billion at the end of March 2010.  Cash balances at the end of the quarter were €745 million, after a scheduled payment of interest on the term loans of €145 million was made at the end of March 2010.

The Group completed the sale of its fluorochemicals business (part of the INEOS Fluor business unit) to Mexichem SA de CV on March 31, 2010.  The Group received gross disposal proceeds of approximately $350 million.  The Group has retained the Clean Development Mechanism (CDM) business of INEOS Fluor, which will now be managed by INEOS Enterprises.