Margin gains in Asia experienced a remarkable rebound over the last 12 months as core EBITDA hit US$ 144 million, up from US$ 93 million in the first quarter of 2013 although still 4% lower than the US$ 150 million achieved in the second quarter of 2012, mainly due to lower output at its flagship Glycols site in USA, which was undergoing a planned turnaround.
“We have been seeing signs that the trough period of the past two years is coming to an end and this is extremely encouraging,” says Mr. Aloke Lohia, Group CEO of Indorama Ventures. “We are excited that IVL’s differentiation and low cost strategy is paying off since our 18% margin recovery over first quarter this year is much superior to a typical industry player.”
“Price volatility continues to be high which saw our feedstock – Paraxylene and MEG drop by 12% in second quarter this year over first quarter that led to a inventory loss of US$ 38 million. On the positive side we see the PTA business recovering moderately and our HVA and PET business margins improve significantly,” Lohia noted.
The Company’s North American businesses continues to outperform other regions despite loss of contribution from its flagship 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 US$ 75 million was due uncontrollable external factors, such as a sizeable inventory loss of US$ 38 million and a sharp US$ 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 explained.
“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.”
Management commitment to turning around its joint ventures over time bore fruit as German affiliate Trevira achieved its maiden net profit in the second quarter under IVL’s stewardship. The second half of 2013 is expected to see continued growth as operational excellence projects kick in and a new state-of-the-art Polyester fiber facility in Indonesia commences operation in the fourth quarter that will lower IVL’s costs significantly.
The Company’s European business is currently undergoing brownfield expansion of PTA capacity in Rotterdam and debottlenecking of its PET plant in Poland that will further improve the Company’s cost competitiveness in the whole of Europe.
“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,” Lohia added. “We are now buoyed by the positive changes taking place in the market, such as greater discipline in the Asian region with some rationalization 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 Baht 0.14 per share or US$ 22 million.”
Indorama Ventures Public Company
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