Market Updates

INEOS Taking It Further & Farther

January, 2019

INEOS has been brightly shining in the European Chemical sector where uncertainties seem to have taken home for long in the midst of tighter financial margins and limited growth probabilities. INEOS came in to existence little over two decades ago in 1998 when a new company was formed with management buyout of BP’s petrochemicals assets in Antwerp, Belgium. The small start

Silver Lining in Dark Clouds: We all have been reading and thinking about the uncertainties in global market with unpredictable Trump policies, fluctuating crude oil prices, BREXIT deal concluding no results and other geopolitical changes. The markets have been going up and down while trying to analyze the global market trend expectations. Some of the analysts have provided gloomy image for global growth while others have shed light on growth areas with changing US market and evolving Asian giants. There has been one thing common among all these analysts wherein they all are considering Europe as region with very little to negligible growth chances, even after avoiding darker side predictions. INEOS on the other hand, has been consistently growing and has become more than $60 billion turnover conglomerate.

Creation of Behemoth: Less than two year later than March 1998, when INEOS was registered, the organization started buying businesses from its rivals, when the deal was struck with ICI to sell acrylics business to INEOS for £505 millions. During first decade of the business the company acquired businesses from 22 companies by 2008. INEOS captured the businesses from various giants including BASF, Amoco, Bayer, Borealis, Degussa, and Dow Chemical Company, while the major chunk came from BP and ICI. Following two years when European chemical market was under stress and peer LyondellBasell filed for bankruptcy, INEOS stood firm even with declining sales. Since 2011, the company resumed growth trajectory through business addition and series of strategic joint ventures and today boasts of being oil & gas and chemicals conglomerate employing more than 19,000 people across 24 countries worldwide.

Determination & Growth Continuation: INEOS, led by the Jim Ratcliffe, has remained determined to remain private even while financing deals through high yielding bonds over and over again. The business acumen of management has been consistently leading the organization growth via both organic and inorganic means. Alongside more visible inorganic business acquisition strategy, INEOS has also been investing in greenfield projects in opportunistic areas. Recently, the company has announced investment in ethane cracker and propane dehydration plant for petrochemical business, which is first in last two decades in Europe. INEOS has selected Antwerp, Belgium business for its €3 billion cracker investment. Among recent inorganic deals, the company has announced acquisition of Wilmar ethoxylation plant in Lavéra, France and Ashland’s composite business and Butandiol facility in Marl, Germany.

While INEOS has made Jim Ratcliffe richest man in the country, it has also created value in relatively scrapped businesses which other bigger companies did not want. The organization is one of the brightest shining star in the cloudy chemical industry in Europe and is expected to take it further beating all the market odds. How the future unfolds only time will tell, however the business success of the leadership team is expected to keep paving way for many to learn from it.

- Ankur Kalra,
Manager – Chemicals & Materials,
Infoholic Research