Based on unaudited management information, INEOS Enterprises’ EBITDA before Exceptional Items (“EBITDA”) for the second quarter 2023 was €88m. This compares to an EBITDA of €133m for the second quarter 2022 and €96m in the prior quarter.
Market conditions were weak throughout the quarter but performance in Q2 showed resilience given continued margin pressure and commercial shutdowns in Europe, in addition to slowing demand across most regions and markets.
Pigments’ reported Q2 2023 EBITDA of €38m, compared to €56m in Q2 2022 and €38m in the prior quarter. The Q2 2023 EBITDA of KOH was €19m. Q2 continued to be adversely impacted by weak Titanium Dioxide demand in North America in part due to a stalling housing market reducing overall coating demand. Margins, however, remained resilient and have remained stable for the year to date. Demand for KOH remained stable throughout the quarter with good production and higher margins from increased chlorine pricing.
Composites’ Q2 2023 EBITDA was €51m, compared to €51m in Q2 2022 and €49m in the prior quarter. North American margins remained strong supported by continued demand in the transportation and infrastructure markets, partially offset by softness in the residential construction sector. Following Chinese New Year shutdowns, demand in Asia improved compared to the previous quarter, albeit this was slightly offset by loss of volumes in India as production was impacted by Cyclone Biparjoy in June. Europe experienced reduced levels of demand, as product from cost advantaged regions continued to be imported.
In Q2 2023, Solvents’ EBITDA loss was €(4)m, compared to a profit of €12m in Q2 2022 and profit of €10m in the prior quarter. Results in Q2 contain an unfavourable €7m inventory holding loss compared to the prior quarter. Despite stabilisation in energy prices, European demand was negatively impacted in the quarter, which resulted in reduced volumes, particularly of IPA and MEK. BDO remains challenged by increased levels of imported product from Asia, albeit at a slower pace than previous quarters, resulting in reduced sales volumes. Accordingly, production volumes were reduced in line with demand and the business continued to focus on maintaining margins.
Chemical Intermediates reported Q2 2023 EBITDA of €8m compared to €19m in Q2 2022 and €5m in the prior quarter. Market conditions at Joliet were challenging as demand in North America for its products remained subdued. Volumes, particularly for PIA and TMA, continued to be negatively impacted by a consequence of cheaper materials from Asia, albeit results were supported by stronger margins and increased pricing for Maleic Anhydride (MAN). Calabrian and Compounds businesses contributed stable business performance in the Chemical Intermediates division in the quarter driven by strong margins offset by lower sales volumes across all sites.
Hygienics reported an EBITDA loss for the quarter of €(5)m which compares to €(5)m in Q2 2022 and €(5)m in the prior quarter. The business continued to expand its portfolio and develop new product ranges including its upcoming launch of new household cleaning products and laundry detergents.
In line with our conservative financial policy, we have maintained a prudent capital position with continued control over our operating cost base. In the quarter, INEOS Enterprises made a voluntary repayment of the Subordinated Related Party Loan of c.€100m. At the end of the quarter, we reported cash balances of €302m and net debt of €1,220m, resulting in a pro-forma net debt leverage of c.3.1x.
In July, INEOS Enterprises executed new syndicated term loans of €650m and $550m, both maturing in 2030. Proceeds were used to refinance a portion of the existing USD borrowings, refinance the securitisation facility and put cash on the balance sheet to support future strategic opportunities. This transaction was net debt neutral.