Consolidated Energy - comment

Q2 results support recent bond prices, but management was clear that the quarter should not be annualised, guiding to $700-750m of mid-cycle EBITDA and reiterating its $700m FY target. The strong cash generation should allow further gross debt reduction, although leverage is likely to struggle to reach the company's c.3.0x target. Iranian supply has started to return and methanol forward prices have already given back around half of the spike, while the planned Natgasoline turnaround in Q4 is expected to be a $30-40m EBITDA drag.

Consolidated Energy delivered a very strong Q2, with pro forma adjusted EBITDA of $416m versus $154m in Q1, taking LTM EBITDA to $824m and leverage down to roughly 3.5x. The beat was almost entirely a pricing story rather than volumes, with methanol market prices increasing by an average of 55% in Q2 2026 versus Q1 as the Iran/Hormuz disruption removed Middle East supply from the market. Fertiliser prices also strengthened, supported by tighter supply and higher European gas costs. Methanol contributed $268m of EBITDA and fertilisers $141m, with group production broadly stable and key assets benefiting from the sharp repricing. We continue to hold the '31s, bought at 92c last year.