Indorama sees continued growth in 2nd-half

IVL saw total sales revenue of US$1.9 billion (Bt59 billion) in the second quarter, a rise of 9 per cent over the same period last year.

Margin gains in Asia experienced a rebound over the past 12 months as core earnings before interest, taxes, depreciation and amortisation (EBITDA) hit $144 million, up from $93 million in the first quarter although still 4 per cent lower than the $150 million achieved in the second quarter of 2012. This was mainly because of lower output at its flagship Oxide and Glycols site in the United States, which was undergoing a planned turnaround.

“Our aim is to simultaneously deliver reduced total cost of sales to enhance cash flows while providing reputable, safe and reliable products to our customers,” group chief executive Aloke Lohia said.

 “We are now buoyed by the positive changes taking place in the market, such as greater discipline in the Asian region with some rationalisation of older and less efficient capacities, and we are satisfied that our strategies are paying off. The board has recommended an interim dividend payment for the first half of 2013 of Bt0.14 per share or $22 million,” he said.

 

Strategy pays off 

“We are excited that IVL’s differentiation and low-cost strategy is paying off, since our 18-per-cent margin recovery over the first quarter this year is much superior to a typical industry player,” he said.

Price volatility continues to be high, which saw the company’s feedstock – paraxylene and MEG (ethylene glycol) – drop by 12 per cent in the second quarter from the first. This led to an inventory loss of $38 million. On the positive side, it sees the PTA (purified terephthalic acid) business recovering moderately and its HVA (homovanillic acid) and PET business margins improve significantly, Lohia noted.

The company’s North American businesses continue to outperform other regions despite loss of contribution from its flagship Oxide and Glycols business that was under planned turnaround of about two months – a mandatory event that takes place every two to three years. 

“Moderate cash profit of $75 million was due to uncontrollable external factors, such as a sizeable inventory loss of $38 million and a sharp $8 million foreign-exchange swing as the Thai baht sharply depreciated. Nevertheless our experience is that what matters is the health of our core operations, which remain solid,” Lohia said.

“We anticipate continued improvements in our earnings as we leverage on our differentiation and low-cost strategy to provide enhanced margins at the best total cost of delivery.”

German affiliate Trevira achieved its first net profit in the second quarter under IVL’s stewardship.