Q1 2017 Preliminary Trading Statement
INOVYN Limited announces its preliminary trading statement for Q1 2017.
Based on unaudited management information, INOVYN Limited reports that EBITDA for the first quarter of 2017 was €142 million. This represents a quarterly record, and compares to €116 million for the same period last year. On a last twelve month basis, EBITDA now stands at €482 million. The strong financial performance is a result of healthy market conditions, underpinned by a synergy programme that is delivering significant financial benefits.
Capex for the first quarter of 2017 was €33 million.
The first quarter performance
Total sales volumes were up slightly compared to the same period last year and were significantly higher than the previous quarter, which was negatively impacted by the turnaround activity at our Rafnes cellroom and VCM plant during October and November 2016. Our Specialty PVC portfolio continues to grow.
Average prices for General Purpose PVC were higher than both the same period last year and the previous quarter. Ethylene contract prices (as reported by IHS) averaged €1,018 per tonne for the first quarter of 2017, compared to €847 per tonne over the same period last year, and €950 per tonne in the final quarter of 2016. Our average margins over ethylene were higher in the first quarter of 2017 when compared to the same period last year, and were marginally higher than the final quarter of last year.
Average European contract caustic soda prices for the first quarter of 2017 increased by €5 per tonne compared to the previous quarter, and were €45 per tonne higher than the first quarter of 2016. Sales volumes were at similar levels to the same period last year, but were higher than the previous quarter. Implied European caustic soda demand (reported chlorine production, less reported caustic soda exports, plus the reported caustic soda stock change) was higher than the same period in 2016. Margins over energy were similar to the previous quarter, but higher than the first quarter of 2016.
We have delivered approximately €20million of synergy and cost savings in the first quarter of 2017, and approximately €115 million since the formation of INOVYN. Improvements have been delivered in many areas of the business from energy initiatives; transport optimisation; fixed cost reductions; production cost efficiencies; and other procurement savings.
Net cash flow from operating activities was an inflow of €68 million for the quarter with significant outflows on net working capital balances, mainly due to an increase in the level of trade receivables, driven by strong sales. There were tax payments of €9 million in the quarter. Interest of €10 million on both the Senior Secured Term Loan A and the Senior Secured Term Loan B was paid during the quarter, and €17 million of amortisation was paid, of which €13 million related to the Term Loan A. The amount of cash and cash equivalents as at March 31, 2017 was €85 million, compared to €68 million as at December 31, 2016. As at March 31, 2017, €126 million had been drawn down against the Group's €300 million Receivable Securitisation Facility. Net debt was approximately €1,097 million at March 31, 2017, compared to €1,121 million at December 31, 2016. Net debt leverage was approximately 2.3 times as at March 31, 2017.
On April 3, 2017 the Group announced its intention to enter into an amendment to its existing Senior Secured Credit Agreement to:
- decrease the interest rates applicable to Term Loan B, due 2021, and extend the maturity to May 2024;
- decrease the interest rates applicable to Term Loan A, due 2021;
- borrow additional tranche B term loans due May 2024 in a principal amount equal to €60 million, the net proceeds of which will be used to redeem up to 20% of its outstanding 6.250% Senior Secured Notes, due 2021 in two increments of €30 million each at a redemption price equal to 103% of the principal amount of the Notes redeemed, plus accrued and unpaid interest.
The above amendments will result in annualised interest cost savings from mid May this year of circa €7 millon.