Q1, 2011 Trading Statement
INEOS Group Holdings S.A. (‘IGH’ or ‘INEOS’) confirms a significant improvement in trading in the first quarter of 2011.
Based on unaudited management information INEOS reports that Historical Cost EBITDA (‘HC EBITDA’) for the first quarter of 2011 was €726 million, compared to €494 million for Q1, 2010 and €270 million for Q4, 2010. Refining inventory holding gains amounted to €136 million in the quarter, reflecting the movement in crude oil prices over the period. Combined Replacement Cost EBITDA for Refining and Historical Cost EBITDA for Chemicals (‘RC/HC EBITDA’) was €590 million for the quarter, compared to €474 million for Q1, 2010 and €188 million for Q4, 2010. For LTM March 2011, RC/HC EBITDA was €1,680 million compared to €1,564 million for the year ended December 2010. 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 €290 million compared to €286 million in Q1, 2010. Demand for chemical intermediates has continued to be solid across all sectors and all regions, which has enabled the pass through of the recent increases in raw material prices. The market for acrylonitrile has been very tight with strong demand for both fibre and ABS, and high margins have been maintained. There was a scheduled turnaround at Green Lake in the quarter. The global market for phenol has remained tight with continued healthy margins. Demand for Oligomers remains strong across the portfolio, particularly for LAO co-monomer grades. The Oxide business continued to benefit from strong demand for its derivative products. Demand for glycol has remained high with the continued pull from PET and polyester markets.
O&P Europe reported HC EBITDA of €145 million compared to €69 million in Q1, 2010. Demand for olefins in the quarter continued to be strong, particularly in butadiene, resulting in good cracker margins. Monthly olefin pricing ensured the recent increases in raw material costs were passed on fully in the quarter. Polymer demand remained firm across all product types, resulting in healthy margins in the quarter.
O&P North America reported HC EBITDA of €142 million compared to €101 million in Q1, 2010. The market has continued to be tight with improving domestic demand and the business has continued to benefit from its flexibility to be able to utilise cheaper gas feedstocks to maintain good margins. Both Olefins units were back in operation in the quarter after the lightning strike at Chocolate Bayou in November 2010.
Refining reported HC EBITDA of €149 million compared to €38 million in Q1, 2010. Inventory holding gains amounted to €136 million in the quarter compared to gains of €20 million in Q1, 2010. Refining reported RC EBITDA of €13 million compared to €18 million in Q1, 2010. Demand for middle distillates has been reasonable in the quarter and Refining margins have improved compared to Q4, 2010. The business was still impacted by the effects of the severe weather conditions in Grangemouth in the latter part of 2010, as the FCC unit did not come back in to full operation until February 2011.
Total capital expenditure for Q1, 2011 was €94 million, of which €33 million was in the Refining business.
The Group has continued to focus on cash management and liquidity. Net debt was approximately €6.7 billion at the end of March 2011. Cash balances at the end of the quarter were €756 million, and availability under the Revolving Credit Facility was €174 million. Net debt leverage was approximately 4.0 times as at the end of March 2011.