IVL expects to lower revenue forecast
Indorama Ventures (IVL) says it has to lower its revenue forecast for this year by 2.5 per cent to US$7.8 billion (Bt240 billion) because of significant drops in the price spreads of polyethylene terephthalate (PET) and purified terephthalic acid (PTA).
However, it plans for sales to grow by 15 per cent next year as production capacity reaches 6.4 million tonnes, an increase by 1 million tonnes from this year.
Dilip Kumar Agarwal, a director of the company, said yesterday that the current price spread of PET was a low $110 per tonne. The spread is expected to continue dropping during the final quarter because of low demand in winter.
The price-spread drop for both PET and PTA will also reduce the company’s profit below last year’s Bt5.567 billion. The company expects net profit to grow by 25 per cent next year.
Oversupply is the major factor pulling down PET and PTA prices.
Agarwal said the company had set an investment budget of $500 million for 2013-15 to improve production levels. The plan is to strengthen its manufacturing efficiency in the Netherlands while establishing a new plant in Indonesia.
The company also plans to set up a new recycling plant in Thailand worth $50 million. However, there are no plans for mergers and acquisitions next year, as IVL will focus instead on developing the assets and businesses it purchased during the past two years.
He said next year’s revenue would depend mainly on the PET and PTA prices, which are forecast to improve in the first or second quarter on predicted increasing demand in the northern summer.
IVL also plans to expand PET polymer production in the United States by setting up a new plant with annual capacity of 540,000 tonnes. This expansion, which is expected to be completed in the fourth quarter of 2015, will take IVL’s total PET polymer capacity in North America to 2.1 million tonnes per annum.
The new plant will take advantage of expected growth in North America while maintaining a low cost structure and will therefore enhance the bottom line, the company believes.
With respect to the announced PET expansion at its Polish site, the board has decided to carry out significant de-bottlenecking instead of setting up a new production line as it would add more value.
