Borealis AG

Perimeter warning. FY2021 and FY2022 include the nitrogen business. FY2023 figures are shown as restated in AR2024 where available (excluding NITRO). FY2024 and FY2025 income statement lines exclude Borouge (discontinued), but net profit includes it. Year-on-year comparisons across 2022/2023 are therefore not like-for-like.

Income statement (EUR million)

Sources: AR2022 release (2021, 2022); AR2023; AR2024; AR2025. Notes: FY2023 net profit was first reported as 168 and restated to 159 in AR2024. The FY2023 sales and administrative cost figures exclude NITRO; the FY2022 figures include it. The FY2025 equity-accounted figure is Baystar only, since Borouge is in discontinued operations. An AR2022 snippet suggests 2022 excluding NITRO was sales of 9,613 and operating profit of 703; this reading was not confirmed. Pre-tax income was not captured for full years.

Margins and growth

Revenue CAGR FY2021–FY2025 is about -6.7% a year (derived), distorted by the NITRO divestment.

Per-share data. EPS (basic and diluted) and dividends per share are not applicable; there are no listed shares and the company is now a GmbH.

Balance sheet (EUR million, year-end)

Sources: AR2023, AR2024, AR2025. FY2023 total assets and equity are the AR2024 restated values (originally 13,412 and 9,219). FY2025 net debt excludes the EUR 6,823 million dividend payable to BGI.

Cash flow (EUR million)

Sources: AR2023, AR2024, AR2025. FY2023 dividends paid is derived from the two free cash flow lines. The company defines free cash flow as operating plus investing cash flow, so 2025 includes EUR 1,283 million of JV financing inflows. Buybacks are shown as zero because no programme exists.

Ratios

FY2025 ROE is left blank because year-end equity was temporarily reduced by the dividend to BGI and the ratio is not meaningful. Derived FY2023 ROE, ROA and asset turnover use the restated balance sheet with the originally reported profit.

Half-year 2025 (EUR million, HY2025)

Commentary

Revenue: The 2022 peak of EUR 12.2 billion reflected energy-crisis pricing and the nitrogen business. The fall to EUR 7.3 billion in 2023 combines the NITRO exit with a price collapse. In 2024–2025 volumes grew (polyolefins +11%, then +5.4%) while prices fell, so revenue moved sideways.

Operating profit: The inflection is stark: over EUR 1 billion in 2022, near zero in 2023, a partial recovery to EUR 342 million in 2024 helped by Red Sea shipping disruption that curbed imports, then EUR 50 million in 2025. Management cites inventory devaluation, phenol and acetone margins, and asset impairments.

Net profit quality: In 2025 continuing operations lost EUR 85 million; the EUR 428 million headline was produced by EUR 512 million from discontinued operations, mainly Borouge dividends. Baystar lost EUR 156 million at equity (EUR 140 million in 2024, EUR 158 million in 2023).

Balance sheet: Net cash positions in 2022–2023 gave way to net debt after EUR 2.2 billion of cash dividends in 2024–2025. The 95% gearing and 4% solvency at end 2025 are artefacts of the EUR 6.82 billion non-cash dividend, which is offset against the receivable from selling the Borouge shares to BGI.

Cash flow: Operating cash flow rose to EUR 822 million in 2025 despite weaker earnings, on a EUR 423 million working capital release. Capex remains elevated because of Kallo PDH2, the Antwerp and Stenungsund cable-compound projects, Burghausen and Schwechat.

Management guidance. Borealis gives no numeric guidance. AR2025 expects persistent global overcapacity, some potential relief for European naphtha crackers from lower oil prices, and progress on PDH2, Burghausen and Schwechat in the second half of 2026. BGI expects a strong first year, seasonally lower prices in the second half of 2026, and possible margin compression if selling prices fall faster than input and logistics costs. Consensus estimates do not exist for Borealis.

Bull case

1. Self-help is visible in cash: operating cash flow rose to EUR 822 million in 2025 despite the earnings collapse, and fixed-cost savings are on a EUR 100 million track.

2. The growth projects that depressed free cash flow for years (PDH2, Burghausen, Schwechat, cable compounds) are finishing in 2026, which should lift integration and specialty mix as capex falls.

3. Within BGI, European assets gain access to advantaged feedstock elsewhere, a synergy pool above USD 500 million, and an investment-grade balance sheet, while 2026 supply disruption has temporarily improved European utilization.

Bear case

1. The standalone European business barely earns its depreciation: operating profit of EUR 50 million against EUR 447 million of depreciation, amortization and impairment in 2025.

2. Baystar has lost roughly EUR 140–160 million a year at equity for three years with no disclosed turnaround date.

3. The 2026 price spike is event-driven. If Hormuz traffic normalizes, structural oversupply and European cost disadvantage return, alongside integration risk and leadership churn.

Catalysts and monitorables (next 12 months)

• Confirmed start-up and ramp of Kallo PDH2 and the Burghausen HMS PP line.

• BGI Q3 and Q4 2026 results and any European asset review.

• Synergy delivery reporting against the three-year schedule.

• Recontribution of Borouge 4 to BGI (envisaged around end 2026, about USD 7.5 billion).

• Terms and timing of the 2027 tender offer and BGI listing.

• Rating actions, given S&P's negative outlook.

• Safety indicators after the Back-to-Basics plan.

• Whether Borealis GmbH continues to publish standalone annual and half-year reports now that it has no listed debt.

Analyst verdict. Borealis in October 2026 is best understood as a business unit rather than a company. Any assessment must therefore separate two things: the quality of the franchise and the quality of standalone earnings.

The franchise is strong. Borealis owns process technology that three continents of capacity run on, holds a deep patent estate, leads in cable and pipe compounds tied to grid investment, and moved into recycling earlier than peers. It kept growing volumes through a weak market and managed cash well.

The earnings are weak. Excluding Borouge, continuing operations lost EUR 85 million in 2025; operating margin was under 1%; Baystar remains a drain; and the flagship European project arrived four years late. Circular economics have disappointed enough that the company is handing chemical recycling to a partner and has cut its 2030 ambitions to what regulation will support.

The combination addresses the right problem by pairing European technology and customers with low-cost molecules elsewhere, and the first quarter of BGI results was strong. But that quarter was shaped by a supply shock rather than by synergy, and the early exit of the former Borealis chief executive is a reminder that integration is unfinished.

On balance, the evidence supports a view of Borealis as a technologically advantaged but structurally margin-constrained European asset whose value now depends mainly on BGI's execution: starting PDH2 cleanly, fixing Baystar, and proving that group feedstock and scale can lift European returns once pricing normalizes. Readers should treat standalone Borealis figures after FY2025 as increasingly unavailable.