NOVA Chemicals: Record Breaking Quarter Caps Record Breaking Year - Strength Continues

Business Wire, Jan 31, 2008

The Performance Styrenics segment reported break even adjusted EBITDA in the fourth quarter of 2007 compared to an adjusted EBITDA loss of $14 million in the fourth quarter of 2006. The improvement is largely due to higher margins and lower operating costs. Price increases implemented in DYLARK resins and stronger EPS prices contributed to the improvement in results.

2007 Versus 2006

The Performance Styrenics segment reported an adjusted EBITDA loss of $5 million in 2007 compared to a loss of $17 million in 2006. The improvement is largely due to higher margins, higher EPS sales volume and lower operating costs. EPS sales volumes were 13% higher in 2007 compared to 2006, due to stronger domestic demand. Operating costs were lower in 2007 due to cost improvement activities that were undertaken in 2007.

INEOS NOVA Joint Venture

Financial Highlights ((1))

(millions of U.S. Dollars, except as noted)

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Operating Highlights

Average Benchmark Prices (1)

(U.S. dollars per pound, unless otherwise noted)

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Review of Operations

Fourth Quarter 2007 Versus Third Quarter 2007

NOVA Chemicals' 50% share of INEOS NOVA provided an adjusted EBITDA loss of $6 million in the fourth quarter compared to a loss of $22 million in the third quarter. The quarter-over-quarter change was due primarily to lower flow through benzene feedstock costs that offset lower sales volumes.

North American styrene prices increased slightly in the fourth quarter, in response to sharply higher ethylene prices. Industry benzene costs declined 3% in the fourth quarter. In contrast, INEOS NOVA's benzene costs decreased 9% due to its flow through costs, allowing margins to expand.

North American styrene and polystyrene sales volumes declined in the fourth quarter due to seasonally weaker domestic demand. In addition, there were fewer profitable styrene export opportunities in the fourth quarter due to weaker Asian prices.

In Europe, fourth quarter solid polystyrene demand was steady relative to the third quarter. As a result, lower feedstock costs resulted in slight margin expansion. EPS demand was lower due to typical seasonal slowness in the construction market and as customers reduced purchases to consume inventory. EPS margins were lower in the fourth quarter as a result.

Fourth Quarter 2007 Versus Fourth Quarter 2006

NOVA Chemicals' 50% share of INEOS NOVA provided an adjusted EBITDA loss of $6 million in the fourth quarter compared to a loss of $13 million in the fourth quarter of 2006. The quarter-over-quarter improvement was due to reduced costs, as a result of restructuring actions which offset the impact of lower sales volumes for styrene and polystyrene.

2007 Versus 2006

NOVA Chemicals 50% share of INEOS NOVA provided adjusted EBITDA of $17 million in 2007, up significantly compared to a loss of $43 million in 2006. The year-over-year improvement was primarily due to restructuring activities taken in North America and Europe. Since the middle of 2006 the following cost-reduction actions were taken: closure of the Chesapeake, Virginia, Carrington, UK, and Berre, France, polystyrene sites, expiration of a long styrene monomer supply contract, and continued cost reductions in Europe.