'Prospects for 2009 to remain resilient' – Mr Lohia, IRP

06 Mar '09

4 min read

Indorama Polymers Plc (IRP) reported a healthy earning for 2008 despite the market uncertainties while expecting stable performance to continue into this year as demand for its key products are only moderately impacted by the global slowdown.

IRP, which has operations spread across various continents, reported a 43.8% rise in its net profit to 1.53 billion baht for the year 2008 against 1.07 billion baht that was seen in 2007.

“2008 has been a challenging year for us and despite the some exceptional items we had, the overall results were in line with our expectations,” Aloke Lohia, the chairman of the executive committee for IRP said.

“The outlook for 2009 remains challenging and with the company will work intently and prudently to weather the global economic storm.” The blended spread for the company has seen a gradual increase over the past few quarters and during the fourth quarter were the strongest at $269 per ton from $208 per ton seen in the first quarter of 2008. For the year 2008 the spreads stood at $234 per ton which was a 15.27% rise from the $203 per ton seen in 2007.

“The current outlook for Q1'09 is stable and the EBITDA margins for the year 2009 should improve in light of lower priced oil related feedstocks,” Mr. Lohia said adding that for 2008 the EBITDA margins were at 7.3%.

IRP prides itself in having many of the major global consumer goods companies as its customers which has helped it to remain resilient to the global slowdown and this has helped it to see its sales rise by as much as 60.3% to 40.97 billion baht during 2008 against 25.55 billion seen in 2007. The firm's EBITDA rose by 43.4% to 2.98 billion baht against 2.08 billion seen during 2007.

IRP is one of the world's lowest cost producers, an aspect that has helped benefit the firm, and has helped it to attract customers who are looking at cutting cost in the current recessionary times. Apart from this the firm has seen a gradual shift from the higher cost packaging materials to the use of PET based packaging and this along with the low cost producer that IRP helped IRP achieve a 57.4% growth in its sales volumes against the global trend of a 3.4% rise.

The key drivers of the demand were in the emerging markets of Brazil, Russia, India and China where IRP will continue to grow its presence.

Mr. Lohia said that as PET polymer is an industry that is close to consumer's necessities, non-discretionary spending, therefore the impact of global slowdown has had very little impact on the demand side of the equation. He sees the PET polymers utilization rates in Q1'09 to remain healthy. This he attributes to the limited incoming supply pipeline and announced closures of leading players including the rationalization and consolidation that is currently taking place in the industry.

IRP on its part has been one of the players in the consolidation that has partially helped increase the firm's sales. For the fourth quarter of the year the firm reported a 332 million baht loss due to a one-time inventory loss of 831 million baht from the falling crude price and a 152 million baht in foreign exchange loss. Operationally the firm's EBITDA during the fourth quarter rose by a staggering 83.3% to 1.07 billion baht against 582 million baht seen during the fourth quarter of 2007.

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