IVL achieves good results despite Asian PTA weakness

16 Aug '12
4 min read

Indorama Ventures Public Company Limited (IVL), the world's leading vertically integrated Polyester Value Chain producer, achieved consolidated sales of US$ 1,741 million in the second quarter of 2012 (Q2/2012) and a core EBITDA of US$ 151 million and core net profit after tax and minority (excluding exceptional items and Inventory gain/loss) of US$ 54 million. This strong result under current economic conditions was driven partially by volume growth of 13% over Q1 2012, from 1.19 million tons to 1.35 million tons, which has translated into 80% growth of the core EBITDA and 227% growth in core Earning Per Share (EPS).

The recent acquisition of Old World, now renamed Indorama Ventures (Oxide & Glycols) in North America in April 2012 has added a new line of business to IVL and has enabled the group to integrate into MEG (a major feedstock for making Polyester products) for the first time, making IVL the only global polyester producer with integration into both PTA and MEG. With the acquisition, IVL also gained about 30% market share of merchant PEO (Purified Ethylene Oxide) in North America. Indorama Ventures (Oxide and Glycols) Limited has been incorporated for the first time in IVL in Q2/2012 and is one of the key drivers of earnings growth in the period.

IVL achieved a Core EBITDA per ton of US$ 112 in Q2/2012 compared with US$ 71 in Q1/2012. The segment EBITDA increased across all platforms with the addition of new businesses. Regionally, North America remained the top performer while Europe was slightly weaker but not significantly so.
IVL net operating debt to equity is 1.1 times in Q2/2012 following the acquisition of Indorama Ventures (Oxide and Glycols) Limited in April 2012, which is higher than the 0.6 times at the end of year 2011.
The global commodity downturn in Q2/2012 resulted in a significant inventory loss and markdown of US$ 46 million among other issues led to net profit after tax and minority in Q2/2012  of US$ 39 million, a decrease of 28% over 1Q 2012 net profit of US$ 55 million. PTA spreads in June 2012 reached their historical bottom of $50 per ton, a stark decline from the record high of $400 in March 2011. 
Mr. Aloke Lohia, Group CEO of Indorama Ventures explained, "Operational excellence measures at Spartanburg, a Brownfield capacity addition at Rotterdam, due to commence operations in 3Q 2012, as well as the addition of the Oxide and Glycol business in North America, will potentially offset the weak PTA margins in Asia, which will remain low throughout 2012. Our plants will continue to operate at high utilization rates and benefit from the increase in captive consumption of PTA of above 50% in our PET polymers and Polyester fibers and yarns business.

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