Outstanding performance from Nova Olefins/Polyolefins unit
Nova Chemicals announces outstanding operating results and outlook for the second half.
Second Quarter 2008 Results
• Net income of $18 million ($0.21 per share) compares to $80 million ($0.96 per share) for the second quarter of 2007, and $50 million ($0.60 per share) for the first quarter of 2008.
• Adjusted net income of $83 million ($1.00 per share) compares to $84 million ($1.00 per share) in the second quarter of 2007, and $71 million ($0.85 per share) in the first quarter of 2008. See Supplemental Measures on page 22 for details.
• Adjusted EBITDA from the businesses of $258 million, the highest second quarter in history. Results compare to $251 million in the second quarter of 2007, and $256 million in the first quarter of 2008.
Second Quarter 2008 Highlights
• Olefins/Polyolefins adjusted EBITDA was $258 million, the highest second quarter EBITDA in history. Adjusted EBITDA in the first half of 2008 was $504 million, significantly higher than the $387 million recorded in the first half of 2007, and the best first half in history.
• Alberta Advantage average of 17¢ per pound, the highest second quarter Alberta Advantage in history.
“NOVA Chemicals' businesses again delivered EBITDA at an annualized rate of $1.1 billion, in spite of unprecedented energy price volatility and economic uncertainty. With the Alberta Advantage surging, polyethylene prices moving up sharply, and indications that the styrenics business is improving, I am confident that the second half of the year will be stronger than the first,” said Jeff Lipton, NOVA Chemicals' CEO.
Review of Operations:
The Olefins/Polyolefins business unit reported adjusted EBITDA of $258 million in the second quarter of 2008, the highest second quarter in history and significantly higher than the $228 million in the second quarter last year. The year-over-year improvement was due to higher polyethylene volumes and olefin chain margins, which resulted mainly from a stronger Alberta Advantage in the second quarter of 2008. Results improved significantly despite higher operating costs due to a stronger Canadian dollar and higher energy prices.
Adjusted EBITDA of $258 million was up from $246 million in the first quarter of 2008. Higher ethylene and polyethylene prices more than offset higher feedstock and operating costs. Polyethylene sales volume exceeded nameplate capacity for the third consecutive quarter, despite planned maintenance outages at both Joffre polyethylene production facilities.
Second Quarter 2008 Versus First Quarter 2008:
The Joffre Olefins segment reported adjusted EBITDA of $185 million in the second quarter of 2008, up from $168 million in the first quarter of 2008. Margins increased as higher prices for ethylene and co-products outpaced increases in feedstock and operating costs, and due to a gain of $8 million ($6 million after-tax) that represented a true-up of results from a linear alpha olefins margin sharing arrangement. Industry prices for ethylene increased 8%, driven primarily by higher feedstock costs.