Austrian-headquartered chemicals and materials group Borealis has reported improved third quarter sales and profits amid what it described as a “continuously challenging market”.
Buoyed by the performance of its base chemicals business and Borouge joint venture net sales for the period rose nearly 10% to €1.9bn (£1.5bn), while net profits jumped 21% to €129m (£104m) .
However Borealis said its European polyolefin business remained “challenging”.
Dan Shook, Borealis’ finance chief, told PRW that the group’s results were “positive”, but that margins were “under pressure”.
“Europe is in a difficult place and we don’t expect things to improve any time soon. Margins are suffering on the European polyolefins side, and we’re seeing a softness in base chemicals, although we’re pleased with the business spread that we’ve got,” he said.
Borealis would continue to “drive innovation and has a pipeline to service customers”, Shook added.
The group would continue to review its European assets with regards to identifying efficiencies, Shook said, but there no plans “at this stage” to implement plant closures in the region.
Its polyolefins operation would “break even” this year, Shook said, with two thirds of profits coming from the Borouge joint venture and the rest from base chemicals.
Borealis’ chief executive Mark Garrett said annual profits for the year would come in between €400m (£322m) and €500m (£402m), although the fourth quarter was likely to be soft. “We don’t think it’s going to be any better than the same period last year.”
Garrett said next year would see the final work being done on Borouge 3 and the integration of DEXPlastomers, which Borealis acquired outright earlier this month.
“2014, 2015 and 2016 are likely to be years where we get significant profit growth, which is as it should be, what with the $10bn (£8bn) we and our partners will have invested in Borouge,” he added.
Looking at the state of European economies, Garrett called for the region’s labour markets to be “restructured”.
“You need flexible labour markets, which are not subject to regularly wage rises without productivity improvements at the same time. A number of European markets, like Belgium, Austria and Scandianvia are not flexible, whereas Germany is and as a result it is more competitive.
“One might want to close down a plant that is inefficient but you can’t, because the costs of closure are too high," he said.