Borealis AG announced its financial results for 2018 on Feb. 22, showing net profits of €906 million across the full year.
Although this was lower than the 2017 profit of €1.096 million, it was nevertheless another good year for Borealis, said CEO Alfred Stern in a telephone interview with Plastics News Europe. “We are proud.”
The year started well, he said, but ended with weaker margins, as evidenced by the net profit of €94 million in the final quarter of 2018, compared to €247 million in the same quarter of 2017.
The fourth quarter result reflects a weaker economy and industry environment for the integrated PO business and includes an impairment charge of €92 million for the fertilizer business. A bright spot was Borouge, the company's joint venture with ADNOC (Abu Dhabi National Oil Co.), which made a strong, positive contribution to the result.
“Borouge continued to benefit from good markets and demonstrated a good operational performance,” Stern said.
This is expected to continue: the joint venture commenced the construction of its fifth polypropylene unit at the Borouge 3 plant in Ruwais, United Arab Emirates. The unit will grow Borouge's polypropylene capacity by more than 25 percent to 2.24 million tonnes per year.
Stern neatly summed up the year by saying that for the integrated polyolefins (PO) business, it was a good year ‘with increasing headwinds' as the year wore on; for the fertilizer business it was a difficult year that gradually saw some improvement – “But we don't know how long that will stay,” he added.
Asked whether he saw the headwinds faced by the integrated polyolefins business last year continuing into 2019, Stern was cautious.
“The media are still reporting about risks and uncertainties in the market , which doesn't help,” he said. “Plus, the economic forecasts are coming down, which is not comforting to businesses….but we will see how that plays out in the year. The pressure on the PO business will continue to be high.”
This pressure notwithstanding, Borealis continues to invest in new capacity in Europe. The company has taken the final investment decision for a new, world-scale propane dehydrogenation (PDH) plant in Kallo (Antwerp), and is expanding its PP production capacity at two sites. This has to do with the long-term nature of the business, according to Stern.
”The time frames for investment decisions of this kind are extremely long and require long-term planning. Few companies are investing in petrochemical facilities in Europe. We see a demand-supply imbalance ahead for PP. Europe has gone from being a net exporting PP region to being a net importing PP region. It's manageable, but we are investing now to insure a local supply for customers in the long run,” he explained.
The new PDH plant, he added, will be one of the largest and most efficient facilities in the world, integrating new technology that was not available when the existing unit was built. “For example, it will have a combined heat and power system, allowing the process heat generated to be used for energy.”
Moreover, the company is also looking at possibilities to use the hydrogen that is produced next to the propylene as a result of the process.