INEOS Group Holdings PLC (‘INEOS’ or ‘Group’) has provided further information on its liquidity and trading in the fourth quarter of 2008, to address misunderstandings being reported in the marketplace.
As reported on the 21st January, overall EBITDA pre-exceptionals and non-cash inventory adjustments amounted to €300m versus €330m in Q4 2007, which is considered a credible performance in the current economic environment.
Margins held up well in October and November 2008, however as predicted when the company published its Q3 results, December was a poor trading month with many of the company’s customers implementing extended closures over the Christmas period, these plants have now re-opened in January.
Following recent reports, the Group has requested that business analysis do not simply translate inventory-holding losses to cash losses, which ignores working capital unwind.
Inventory holding losses reported in Q4 relate primarily to the group's oil inventories in INEOS Refining and to oil-based feedstock inventories in the upstream petrochemical businesses. These inventory levels are held at neutral stock levels and are not being reduced so the inventory revaluation has no direct impact on cash flow. It is essential to recognise that the historic cost EBITDA impact of the holding loss is countered by a working capital unwind.
Operating cashflow in Q4 was positive after adjusting for seasonal movements at the end of Q3. Working capital management was effective and funded the securitisation and debt amortization payments totaling some €490m. The securitisation repayments primarily reflect the impact of falling oil prices on the group's level of trade receivables as well as reduced trading levels in the month of December. Many of the group's businesses sell at a margin over oil related feedstock so overall revenues reduced in Q4.
INEOS has felt the need to reconfirm the planned levels of Capital Expenditure for 2009 will be €250m – the company does not recognise the €250m-€400m quoted by certain analysts.
ENDS
For further information contact:
Richard Longden – INEOS - Tel: +44 (0) 7710 371998