Borealis released 4 February its 2020 fourth-quarter and full-year financial results, which showed a strong end to a challenging year. The company’s fourth quarter profit came in at €210 million, substantially above the company’s Q3 result and higher than €138 million achieved in the same quarter of 2019. As Mark Tonkens, CFO at Borealis, phrased it, ‘had Borealis issued guidance, this result would have been above’.
The reason, he said during a brief telephone interview, was a combination of volume increase and strong markets in both Europe and Asia.
However, rising natural gas prices and operational issues dragged down the performance of its Fertilizers business, impacting the final result of the quarter and negatively affecting the company’s full year financial performance, the company reported.
In that context, the company has also announced that it is looking for a buyer for its Fertilizers and melamine businesses.
“Consolidation in the fertiliser market needs to happen,” said Tonkens. “There are too many smaller players in Europe. Two years ago, we looked at whether it would make sense to divest these businesses, but now, we really need to make this happen. We are a chemical company with a focus on polyolefins, not a fertiliser company.”
That said, divesting the Fertiliser unit does not mean that Borealis is narrowing that focus. The company has a large range of specialty polymers - a portfolio that is relatively unaffected by the cyclicality of the polyolefin industry, and hence can be counted on to provide a stable margin level. Other interests include Borouge, the joint venture with ADNOC and Baystar, the joint venture with Total in the USA. “We feel comfortable that we have a solid backbone, and prefer to focus on that and expend there,” said Tonkens.
Will it also mean a greater focus on the company’s recycling projects?
As Tonkens noted, circularity is currently a huge topic, and one that is rapidly gaining momentum. “So, yes - and since the deal with OMV closed on 29 October 2020, we see that this has opened opportunities to go even faster on this journey,” he said. The companies are complementary: OMV has focussed on chemical recycling, while Borealis has mainly concentrated on mechanical recycling.