In the third quarter of 2020, Ineos’ earnings improved on a quarterly basis but still down on a yearly basis as the overall core market conditions for all of the businesses had improved from the lows seen in the second quarter.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) in the July-September period was at EUR431 million (USD510 million), showing a recovery from the previous quarter’s EUR260 million (USD307.4 million), but fell from the corresponding time of last year at EUR514 million (USD607.7 million).
“Countries across the world have opened up their economies after lockdown and market conditions have gradually improved during the third quarter. The automotive and durables sectors are still weak but are now slowly improving, and there are encouraging signs from the construction sector,” Ineos stated.
The company’s North American olefins and polymers (O&P) business posted an EBITDA of EUR123 million (USD145.4 million) in the third quarter, down from EUR215 million (USD254.2 million) from the prior-year period.
The ethylene market stayed stable in the period, even when margins were cut on the back of weaker spreads over raw material costs and the impact of increased industry capacity on supply/demand balances. Demand for polymer was relatively robust due to strong consumables demand and improved market conditions for automotive and durables.
The O&P Europe business posted EUR135 million (USD159.6 million) of EBITDA in the period, compared to EUR159 million (USD188 million) in the same period of 2019. Polymer demand was mainly balanced as the markets for food and packaging were strong and the construction and automotive sectors showed gradual improvements.
Margins were limped mainly due to the weak demand for butadiene and benzene, mostly, and decreased prices in the quarter. Demand for butadiene was weak because of the general slowdown in the automotive sector.
Ineos said that its construction and automotive sectors posted improvements with an increase of EBITDA to EUR173 million (USD204.5 million) from the third quarter of last year’s EUR140 million (USD165.5 million).
The company has been implementing several steps to conserve cash including policies to keep control of all discretionary fixed costs. Assessments on its businesses have also been taken to decide any reduction or defer discretionary expenditure and scheduled turnarounds.
Ineos stated that during the pandemic, all of its sites have been operating fully. There was also no significant disruption to its supply chains.
