Based on unaudited management information, INEOS Enterprises’ EBITDA before Exceptional Items (“EBITDA”) for the third quarter 2023 was €67m. This compares to an EBITDA of €111m for the third quarter 2022 and €88m in the prior quarter.
Market conditions remained challenged throughout the quarter with weak demand across most regions and markets, notably Europe, impacting volumes. Nevertheless, margins were successfully maintained through competitive pricing, particularly in North America, and continued fixed cost management.
Pigments’ reported Q3 2023 EBITDA of €33m, compared to €58m in Q3 2022 and €38m in the prior quarter. Q3 continued to be adversely impacted by weak Titanium Dioxide demand across all regions. A stalling house market in North America reduced overall coating demand compared to the same period in prior years. Demand for KOH remained stable throughout the quarter and increased chlorine pricing offset the reduction in sales volumes following a planned shutdown in August. Despite lower volumes, margins remained stable due to increased pricing, particularly in North America, and strong inventory and fixed cost savings management.
Composites’ Q3 2023 EBITDA was €45m, compared to €41m in Q3 2022 and €51m in the prior quarter. North American margins remained strong supported by continued demand in the transportation and infrastructure markets, which was offset by continued softness in the residential construction, marine and recreational sectors. Europe experienced reduced levels of demand, due to extended shutdowns during the summer period and imported product from cost advantaged regions, particularly Turkey. The summer heatwave in China resulted in a decline in demand in the manufacturing sector, adversely impacting sales volumes in Unsaturated Polyester Resins (UPR) and Gel Coats (GC), which was partially offset by good demand from Vinyl Ester Resins (VER) into local infrastructure projects. Despite these reduced volumes in Q3, particularly in Europe and Asia, the Composites business has remained resilient and maintained margins by holding onto prices as underlying raw material prices have softened.
In Q3 2023, Solvents’ EBITDA loss was €(6)m, compared to a loss of €(1)m in Q3 2022 and a loss of €(4)m in the prior quarter. Overall challenging market conditions persisted throughout the quarter, despite more stable energy prices. European demand was negatively impacted in Q3, particularly due to extended summer customer shutdowns, which resulted in significantly reduced volumes. BDO experienced weak European demand and we saw imports into the region, resulting in reduced volumes and lower margins. To manage margins the business reduced production volumes in the quarter.
Chemical Intermediates reported Q3 2023 EBITDA of €2m compared to €16m in Q3 2022 and €8m in the prior quarter. Market conditions at Joliet remained challenging as demand in North America across all three product groups (PIA, TMA and MAN) was subdued with weak demand in the export market and some lost volume from Asian imports, particularly compared to the same quarter in 2022. The Compounds business similarly suffered weak European demand, however the business maintained its focus on strong margins and a favourable customer mix. The results of the Chemical Intermediates division in the quarter were supported by stable performance in the Calabrian business and strong fixed cost savings particularly during a scheduled turnaround at Calabrian, the PIA turnaround at Joliet and a summer shutdown at Sins in Compounds.
Hygienics reported an EBITDA loss for the quarter of €(7)m which compares to €(6)m in Q3 2022 and €(5)m in the prior quarter, reflecting some slightly increased marketing spend. The business continued to expand its portfolio and develop new product ranges including its successful launch of new household cleaning products and laundry detergents in several key distribution outlets.
In the quarter, INEOS Enterprises acquired INEOS Tyssedal, (formerly Eramet Titanium & Iron (ETI)), an ilmenite transformation plant in Norway, which produces raw materials used in the Titanium Dioxide industry and Iron as a by-product. The $245m enterprise value acquisition was financed by existing cash on the balance sheet.
In line with our conservative financial policy, we have maintained a prudent capital position with continued control over our operating cost base and capital investment. In the quarter, INEOS Enterprises executed new syndicated term loans of €650m and $550m, both maturing in 2030 and fully repaid the drawings on the €250m securitisation facility. At the end of the quarter, we reported cash balances of €370m and net debt of €1,484m, resulting in a pro-forma, net debt leverage of c.3.9x.
In October, INEOS Enterprises executed a new fungible term loan add-on of c.€645m in order to refinance the remaining Term Loan A and Term Loan B maturing in 2026.