Q3 2016 Preliminary trading statement
INOVYN Limited announces its preliminary trading statement for Q3 2016.
Based on unaudited management information, INOVYN Limited reports that EBITDA for the third quarter of 2016 was €130 million, compared to €119 million for the previous quarter. The third quarter trading performance in 2016 has therefore delivered the strongest level of underlying EBITDA since INOVYN was formed on 1 July 2015.
Excluding any contribution from the Remedy Assets (which were sold to International Chemical Investors Group on 1 August 2015), this compares to €124 million for the third quarter of 2015.
Unaudited LTM EBITDA at Q3 2016 was €455 million, compared to LTM EBITDA at Q2 2016 of €449 million after adjusting for the impact of the divestment of the Remedy Assets.
Capital expenditure was €102 million for 2016 year to date, €36 million of which was spent in the third quarter.
The third quarter performance
Total sales volumes were flat compared to the previous quarter, although they were lower than the comparable quarter of last year, principally due to the closure of several production assets since INOVYN was formed. Average sales prices for SPVC improved in quarter 3 compared to the previous quarter, although they were lower than the same period last year. Ethylene contract prices averaged €932/te for the quarter compared to €905/te for the previous quarter and €1,028/te in quarter 3 last year. With the sales price increases achieved during quarter 3, margins over ethylene were essentially unchanged, although they were lower than the same period last year.
Average European contract caustic soda prices decreased by €5/te compared to the previous quarter, but were €15/te higher than the third quarter of 2015. Sales volumes were lower than both the previous quarter and the third quarter of 2015. Implied European caustic soda demand was higher than in the second quarter of 2016. Margins over energy, were marginally lower than the previous quarter, but higher than the third quarter of 2015.
We have delivered approximately €55 million of synergy and cost savings for 2016 year to date, €20 million of which was in the third quarter of 2016, mainly relating to energy initiatives, transport optimization, fixed cost reductions, production cost efficiencies, and other procurement benefits.
Net cash flow from operating activities was an inflow of €97 million for the quarter, (and €252 million for the year to date), with working capital outflows on stocks following inflows the previous quarter. There were modest tax payments of €3 million in the quarter. Quarterly interest of €12 million on both the €240 million Senior Secured Term Loan A and the €535 million Senior Secured Term Loan B was paid during the quarter and €13 million of quarterly amortization was paid at the end of the quarter, of which €12 million was related to the Term Loan A. The amount of cash and cash equivalents as at September 30, 2016 was €64 million, compared to €382 million as at June 30, 2016 (albeit that the cash balance at the end of quarter 2 included €335 million to finance the Solvay exit payment in early July). As at September 30, 2016, €93 million had been drawn down against the Group's €300 million Receivable Securitization Facility. Net debt was approximately €1,103 million at September 30, 2016, compared to €1,138 million at June 30, 2016 (after adjusting for the €335 million Solvay exit payment). Net debt leverage was approximately 2.4 times as at September 30, 2016.
ENDS