A high level of investment related to growth projects and turnarounds has led to a €48 million reduction in second quarter net profit at Borealis. The company’s net profit reached €261m compared with €309m for the same period last year.
Total sales were up, however, from €2.15 billion in the second quarter of 2016 to €2.25bn in the corresponding period this year. European integrated polyolefin margins remained healthy but were softer than in the second quarter of 2016. Net debt for the quarter was reduced by €112m, reflecting a solid business performance.
Meanwhile, Borealis and the Abu Dhabi National Oil Company (ADNOC) have signed a framework agreement under which the companies will advance two key projects that will expand both ADNOC and Borealis’ downstream petrochemicals business and support the delivery of ADNOC’s integrated smart growth and partnership strategy.
Under the agreement, ADNOC and Borealis will move to the pre-feed (front end engineering and design) stage for the construction of the Borouge 4 complex, which encompasses a world-scale, mixed feedstock cracker, using existing feedstock available in Abu Dhabi and downstream derivatives units for both polyolefin and non-polyolefin products. The proposed Borouge 4 complex is slated to come on stream around 2023 and will be integrated with ADNOC’s Takreer refinery.
Simultaneously, the companies have agreed to commence engineering, procurement & construction (EPC) tendering for an additional polypropylene plant (PP5) based on Borealis’ proprietary Borstar technology. The plant, to be integrated with the Borouge 3 complex, will add value to the surplus propylene available from Takreer’s new Propane Dehydrogenation (PDH) unit, producing around 500,000 tonnes per year of polypropylene.
“Borealis has achieved a solid result for the second quarter, making for a record first half year result. The generally healthy integrated polyolefin margins have been the main driver for this result,” said Mark Garrett, Borealis’ chief executive. “We look forward to embarking on the next stage of our journey, with the extension and expansion of Borouge. This will allow us to capitalise on the steep demand growth for polyolefin products in Asian markets.
“Our expectation that integrated polyolefin margins will gradually normalise, remains unchanged. We nevertheless believe that margins will stay at a healthy level in the next quarter. We anticipate further improvement in our fertiliser business, under still difficult market conditions. This year the main challenge for our company has been the record number of turnarounds. We are proud to be able to say that we have successfully completed the majority of them. However, we are very much aware that we still have significant turnaround work to complete in the second half of the year.”