October 28, 2024 15:50

During the recent third-quarter financial report for ENI Group, further insights were provided on the transformation, decarbonization, and relaunch plan for Versalis, initially unveiled in March and partially previewed days ago.

Starting with third-quarter results, the performance was lackluster, mirroring trends among other European petrochemical firms.

Between July and September, Versalis reported an adjusted operating loss of €193 million, a slight improvement from the €198 million loss in the same quarter of 2023, bringing total losses to €583 million for the first nine months of the year, up from €377 million in 2023.
The primary factors, according to the company, are “macro headwinds and comparatively higher production costs in Europe vs. other geographies, which reduced the competitiveness of Versalis with respect to U.S. and Asian players in an oversupplied market.”
The presentation also noted shrinking margins in polyethylene and styrenics due to weak commodity prices and competitive dynamics.
Sales volumes in the third quarter reached 810,000 tons, up 6% from the same period in 2023. Year-to-date volumes total 2.43 million tons, marking a 4% increase over last year.

Presenting these results, Francesco Gattei, ENI’s chief transition and financial officer, shared some details on Versalis’s transformation plan.
The plan includes closures of petrochemical plants and €2 billion in investments over the next five years focused on three areas: polymer specialties (compounding), biochemistry, and circular economy, including both mechanical and chemical recycling. The aim is to achieve positive EBIT by 2027 and cash flow break-even by 2028.

From a workforce perspective, stated Gattei, “This transformation can leverage the resources of a highly skilled workforce but dedicate it to higher-value and more sustainable activities.”

Looking closer at specific sites, the plan outlines major changes at Priolo, Brindisi, and Ragusa, as well as the divestiture or sharp reduction in the stake in the Dunkirk cracker in France, following the completion of elastomer shutdowns in Grangemouth, Scotland, earlier this year.
These steps are, as Gattei explained, necessary responses to the structural disadvantages of basic chemical production in Europe compared to other regions.

The Priolo cracker will be closed, to be replaced by a bio-refinery for sustainable aviation fuel and a chemical recycling plant for plastic waste, utilizing proprietary HOOP technology.
The Brindisi cracker will also be shut down, though polyolefin synthesis will continue using more cost-advantaged imported raw materials. Part of the Brindisi site will also be repurposed for producing stationary networked batteries.
A reduction in polymer commodity capacities is also planned, with the announcement that polyethylene production at Ragusa will cease, and further measures may follow.
A map (see below) highlight additional investments in mechanical recycling at Porto Torres and Porto Marghera, some of which were previously announced but not yet completed.

In response to a question, Gattei did not rule out the possible sale of a stake in Novamont, the group’s biochemistry and biopolymers subsidiary.

Versalis CEO Adriano Alfani shared examples of the company’s ongoing transformation: in the past, over 50% of capital expenditures (capex) were directed toward basic chemicals and commodities, but this share will drop to 10% in the coming years, with the remaining 90% allocated to new platforms.

This shift will inevitably reshape the portfolio: specialties, including compounds, biochemistry, and circular products, currently make up 30% and are set to rise to 65% within five years, once the transformation process is complete.
On the labor relations front, Alfani explained that the restructuring plan is admittedly “aggressive,” but the unions recognize the challenges facing the European chemical industry and that Versalis cannot continue to incur losses".

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