Ceepackaging

Corporate

Borealis records solid performance for 2008 despite difficult fourth quarter

These solid results were achieved despite deteriorating market
conditions, especially in the last quarter. The industry faced a
dramatic rise in feedstock prices in the first half of the year, followed
by a drop in prices during the fourth quarter. However fixed quarterly
feedstock prices in the fourth quarter did not adequately reflect this
movement and caused an imbalance with dropping polymer prices
leading to a net loss of EUR 122 million in the fourth quarter. More
than half of this loss was due to inventory impairment at year-end.
Borealis’ leadership position in safety was furthered during 2008 with
a Total Recordable Injuries (TRI) per million working hours of 1.6
(excluding the melamine and plant nutrients operations), down from
1.7 the year before. A step change in safety was attained in the
melamine and plant nutrients operations, in which the Lost Time
Accident (LTA) frequency reached a level of 0.9, compared to 5.6 in
2007. Starting in 2009, the melamine and plant nutrients TRI
frequency measurement will be reported as part of Borealis’ result.
Borealis continues to progress its strategic investments. In Europe,
important developments in 2008 included the inauguration of the
expanded Borstar® second generation polypropylene plant in
Burghausen, Germany, and the start of construction of the new
350,000 tonnes per year (t/y) polyethylene plant in Stenungsund,
Sweden. The latter, Borealis’ largest-ever investment in Europe, is
planned for start-up at the end of 2009.
In the Middle East, Borouge, Borealis’ joint venture with the Abu Dhabi
National Oil Company (ADNOC), continued to perform well during the
year, advancing its reputation and business throughout the Middle
East and Asia. In addition to the Borouge 2 project, which will expand
production capacity from 600,000 tonnes per year (t/y) of polyethylene
to 2 million t/y of both polyethylene and polypropylene by 2010, the
company announced the initiation of a feasibility study for Borouge 3
to add an additional 2.5 million t/y of capacity.
The proposed expansion would enable Borouge to meet the long-term
growth in demand for polyolefins in the Middle East and Asia for the
infrastructure, automotive and advanced packaging markets.
Borealis is also further developing its Base Chemicals business by
actively participating in the development of first complex in the new
Chemicals Industrial City (Chemaweyaat) to be located in Abu Dhabi,
United Arab Emirates. It will be the largest and most integrated of its
kind in the world, making Abu Dhabi a significant player in the
international chemical markets. In addition, Borealis is participating in
a feasibility study for the construction of a world-scale plant nutrients
complex in Uzbekistan.
On the innovation front, Borealis celebrated the groundbreaking for
the expansion of its Innovation Headquarters in Linz, Austria,
supporting its commitment to Value Creation through Innovation. With
an investment of approximately EUR 50 million, Linz is becoming the
international hub of Borealis’ research activities, focusing on the
innovation of compounding as well as polymer solutions for the pipe,
automotive and advanced packaging industries.
“Though the global recession has impacted our business, we have
come through 2008 with solid results,” comments Borealis Chief
Executive Mark Garrett. “We will continue to ensure we are costcompetitive
and operationally efficient, while maintaining our
leadership in safety. We know the next two years will be very difficult
and volatility in the financial markets and the real economy will
continue. We have taken steps to protect our liquidity while ensuring
our counter-cyclical investments in Stenungsund and Abu Dhabi are
completed.”