Chemicals & Materials

In the Chemicals & Materials segment, OMV is now one of the world’s leading providers of advanced and circular polyolefin solutions and a European market leader in base chemicals, fertilizers*On February 2, 2022, Borealis received a binding offer from EuroChem for the acquisition of its nitrogen business including fertilizer, melamine and technical nitrogen products., and plastics recycling. The Company supplies services and products to customers around the globe through Borealis and its two joint ventures: Borouge (with ADNOC, based in the UAE and Singapore) and Baystar (with TotalEnergies, based in the United States).

Financial performance

The clean Operating Result more than quadrupled to EUR 2,224 mn (2020: EUR 519 mn), mainly attributable to substantially higher European polyolefin margins, positive inventory valuation effects, and the full consolidation of Borealis.

The contribution of OMV base chemicals increased, mainly fueled by higher ethylene and propylene indicator margins. The ethylene indicator margin Europe grew by 8% to EUR 468/t (2020: EUR 435/t), while the propylene indicator margin Europe increased by 25% to EUR 453/t (2020: EUR 364/t). Both saw strong demand throughout the year, in particular in the second half. Propylene indicator margin was able to benefit from a demand recovery in the automotive sector.

The utilization rate of the European steam crackers operated by OMV and Borealis improved significantly by 17 percentage points to 90% in 2021 (2020: 73%). 2020 was impacted by the unplanned outage of the Stenungsund steam cracker that began in Q2/20.

The contribution of Borealis excluding JVs soared by EUR 1,219 mn to EUR 1,437 mn (2020: EUR 219 mn), primarily due to the outstanding performance of the polyolefin business and increased contributions from the base chemicals and nitrogen businesses. The Borealis base chemicals business improved largely on account of positive inventory valuation effects and higher capacity utilization at the Stenungsund steam cracker. The polyolefin business saw an unprecedented rise in results, which was driven by a steep increase in margins and positive inventory valuation effects, but also benefited from higher volumes. The polyethylene indicator margin Europe increased by 67% to EUR 582/t (2020: EUR 350/t) while the polypropylene indicator margin Europe saw a stronger increase, by 78%, to EUR 735/t (2020: EUR 413/t). Both indicator margins were supported by strong demand in the European markets coupled with a tightening supply-demand balance. In particular at the beginning of 2021, a heavy maintenance season limited regional supply while logistic constraints throughout the year inhibited additional supply from outside of Europe. Polyethylene sales volumes improved by 3%, while polypropylene sales volumes grew by 1% compared to 2020. The energy and healthcare industries in particular drove demand, while volumes in the consumer industry softened. The contribution from the nitrogen business grew compared to 2020, mainly due to positive inventory effects and a positive effect from the reclassification as an asset held for sale.

The contribution of Borealis’ JVs grew substantially to EUR 534 mn in 2021 (2020: EUR 81 mn). The full consolidation of Borealis and the subsequent separate reporting of the JVs were the main factors in this increase, while much higher polyolefin prices in the Asian markets and in the United States fueled the result. Polyethylene and polypropylene sales volumes generated by the JVs decreased by 4% compared to 2020, mainly on account of lower Borouge sales volumes due to logistics constraints in Asia. Baystar sales volumes remained stable in 2021 despite being impacted by the Texas freeze in the first quarter of 2021.

Net special items amounted to EUR (396) mn (2020: EUR 1,049 mn) and were mainly related to the impairment of the nitrogen business of Borealis. In 2020, net special items were mainly related to a step-up in the valuation of the previously owned 36% share in Borealis. The Operating Result of Chemicals & Materials grew to EUR 1,828 mn compared to EUR 1,568 mn in 2020.

Capital expenditure in Chemicals & Materials amounted to EUR 835 mn (2020: EUR 4,360 mn). Capital expenditure in 2020 was mainly related to the acquisition of an additional 39% stake in Borealis for USD 4.68 bn. In 2021, besides ordinary running business investments, organic capital expenditure predominantly related to investments for the construction of the new propane dehydrogenation plant in Belgium by Borealis.