Oxea, a global supplier of Oxo Intermediates and Oxo Derivatives, today announced robust earnings for the second quarter of 2012, with net sales of €380 million getting close to prior year's level. Margins in Q2 2012 were impacted by the Turnarounds at the plants in Oberhausen and Bay City and by the inventory carry over impact from the strong decrease in propylene prices. Therefore, adjusted EBITDA could not yet reach the level of the prior year period. On a quarter to quarter basis, Oxea was again able to increase revenue and adjusted EBITDA. Compared to the first quarter of 2012, revenues were up by 2% and adjusted EBITDA was up by 3%. This underpins the continuation of the positive earnings trend in the first half of 2012 after a softer second half of 2011.

In the first half of 2012, Oxea generated strong cash flows, mainly due to a significant improvement of Trade Working Capital. Cash provided by operating activities was €71 million compared with €48 million in the corresponding period of the prior year. The strong financial position allowed Oxea to redeem 5% of the outstanding Senior Secured Notes in June 2012. A further optional redemption of 5% was announced in July 2012 and completed as of August 10, 2012. Within two years after the Bond issue, Oxea has executed all three redemption options, each of 5% of outstanding Senior Secured Notes at a redemption price of 103% as permitted under the terms and conditions of the Indenture.

Net sales

Net sales for the three months ended June 30, 2012 were €379.7 million, a decrease of 2.9% compared with the corresponding period of the prior year. Overall, volumes were 2.9% lower, mainly driven by the Turnarounds as mentioned above in Q2 2012. Oxo Intermediates volumes and Oxo Derivatives were 2.0% and 5.9% lower, respectively, than in the corresponding period of the prior year. Of our revenues for the three months ended June 30, 2012, €191 million resulted from sales in Europe, €120 million in North America, and €68 million in the rest of the world compared to €212 million, €117 million, and €62 million, respectively, in the prior year period.

Gross profit

Gross profit for the three months ended June 30, 2012 amounted to €46.4 million compared with €54.9 million in the corresponding period of the prior year. This development is mainly due to the Turnarounds and the inventory carry over impact of the strong decrease in propylene prices as mentioned above, such that gross profit amounted to 12.2% of sales compared with 14.0% in the second quarter of 2011.

Selling, general & administration expense (SG&A)

SG&A expense for the three months ended June 30, 2012 amounted to €9.6 million compared with €8.8 million in the corresponding period of the prior year, mainly due to higher consulting fees and the strong US Dollar during Q2 2012.

Other operating income/(expense)

Net other operating income for the three months ended June 30, 2012 amounted to €11.9 million compared with a net other operating income of €2.0 million in the corresponding period of the prior year. The increase is primarily attributable to insurance income, which has been treated as an exceptional item for purposes of calculating adjusted EBITDA.

Operating result

Operating result for the three months ended June, 2012 was €47.1 million compared with €46.6 million in the corresponding prior year period, primarily as a result of lower gross profit and higher SG&A expense as explained above, compensated by higher net other operating income.

Financial result

Net financial expense was €14.6 million compared with €16.8 million in Q2 2011 due to higher net foreign currency losses in the corresponding period of the prior year.

Net income

Net income was €22.7 million compared with €16.4 million in the corresponding period of the prior year due to a higher operating result and a lower net financial expense as mentioned above, as well as lower income taxes.

Adjusted EBITDA

Adjusted EBITDA at €46.0 million compared with €56.4 million in the corresponding period of the prior year was mainly driven by lower gross profit as mentioned above.

Cash flow

The company continued to generate positive free cash flow and during the first half of 2012, Oxea generated â€70.7 million in cash from operating activities compared with €48.0 million in the corresponding period of the prior year. Higher inflows from working capital were partly offset by lower earnings from operating activities and higher income tax payments.

Cash used in investing activities was €37.8 million compared with €12.5 million in the corresponding period of the prior year due to higher spending for growth projects.

Cash used in financing activities was €48.7 million compared to €104.5 million in the corresponding period of the prior year, which included a payment to shareholders in the amount of €55 million.