Trading Statements

Trading Statement Q2 2020 - INEOS Styrolution Holding Limited


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

Based on unaudited management information INEOS Styrolution reports a replacement cost EBITDA before Special Items for the second quarter of 2020 of €164 million, compared to €200 million for the same quarter in 2019. The second quarter results were adversely impacted by non-cash inventory holding losses of approximately €71 million (Q2-2019: gain of € 20 million) as a result of the large decline in crude oil and product prices at the start of the quarter. Historical cost EBITDA (‘EBITDA’) for the second quarter of 2020 was €93 million compared to €220 million in Q2-2019 and €138 million in Q1-2020.

Our Q2-2020 trading results reduced compared to Q2-2019 as overall sales volume decreased in Styrene and Specialties mainly because of weaker downstream demand and COVID-19 effects. We did see a strong recovery in our standard products sales in Asia, where Polystyrene and ABS Standard sales improved by 29% and 10% respectively compared to Q1-2020.

In the second quarter of 2020, Polystyrene EBITDA was €51 million (Q2-2019: €67 million). We saw strong sales in Asia where the Chinese and Korean economies recovered first from lockdown measures, which led to higher sales volumes compared to previous quarters. The strong demand also improved market margins. Our sales volumes in the Americas and EMEA decreased compared to the same period last year due to a competitive market environment.

The ABS Standard EBITDA in the second quarter of 2020 was €25 million (Q2-2019: €27 million). Strong Asian demand and a stable EMEA business led to solid performance, despite COVID-19 impacts. Market margins improved in these regions as feedstock prices declined while sales prices were more stable. Arbitrage from Asia closed because of strong demand within the region.

The Specialties business reported an EBITDA of €25 million in the second quarter of 2020 (Q2-2019: €52 million). The Company saw strong impacts from COVID-19 lockdown measures across the regions due to plant closures. The main impacts came from the automotive industry and the mandatory closure of our plants in India. Margins improved compared to the same quarter in 2019 as feedstock prices declined and quarterly sales prices were fixed.

Styrene Monomer reported a Q2-2020 EBITDA loss of €8 million (Q2-2019: gain of €74 million). Trading conditions were weak as new capacity came on-stream during the first quarter of 2020 in China. Styrene sales declined because downstream demand was soft. Oil and derivative product prices sharply decreased, which led to significant inventory holding losses. Our Texas City plant was in scheduled turnaround during most of the quarter.

On 29 June 2020, INEOS has announced its intention to acquire BP’s global Aromatics and Acetyls business. The business consists of 15 sites including joint ventures across

the world (5 in the Americas, 2 in Europe and 8 in Asia). The closing of the transaction is subject to competition authority clearance.

INEOS Styrolution has continued to maintain its focus on cash management and liquidity. Net debt was €1,352 million at the end of June 2020 after the payment of a $400 million deposit in connection with the BP Acquisition. Cash balances at the end of the quarter were €380 million, and availability under the undrawn credit facilities was €311 million. Net debt leverage was approximately 2.1 times replacement cost EBITDA and 2.6 times historical cost EBITDA as at the end of June 2020.