Methanex Q2 net higher despite Chile squeeze

23 July 2008 11:52  [Source: ICIS news]

LONDON (ICIS news)--Methanex's year-on-year net income climbed 9.2% to $38.9m in the second quarter but was sharply down from the first quarter's net result of $65.5m, the company said on Wednesday

The world’s largest methanol producer said sales volumes were down 5.8% compared with the year earlier quarter but up 8.7% compared with the first quarter.

Methanol production in Chile was lower in the second quarter as cold weather hit natural gas supplies to the Methanex plant from Chile’s state-controlled supplier Empresa Nacional del Petroleo.

Methanex said it had achieved an average realised methanol price of $412/tonne in the quarter. Methanol prices peaked in December 2007 and averaged $545/tonne, Methanex said in its earlier, first quarter 2008 report.

Methanex’s adjusted second quarter 2008 earnings before interest, tax, depreciation and amortisation (EBITDA) were $78.9m from $76.5m in the year earlier quarter and $127.1m in the first quarter of 2008.

"Entering the third quarter, the pricing environment remains strong,” president and CEO Bruce Aitken said.

“Overall methanol demand is healthy, despite softness in some derivatives due to general weakness in the economy in some regions.

"In China, low operating rates coupled with strong demand, including growth into DME (di-methyl ether) and gasoline blending supported by high energy prices have resulted in China significantly increasing its imports over the quarter.

"Plant outages across the global industry have also continued, adding further tightness to the market."

Methanex would be in a better position to benefit from strong industry conditions with the shift to its larger plant in New Zealand in the third quarter of 2008, Aitken added.

“Longer term, we also expect production improvements from Chile, resulting from the gas exploration activities ongoing in southern Chile, and from our Egypt project which is on schedule to be producing methanol by early 2010."

Methanex produced 261,000 tonnes of methanol from its Chile plants in the quarter, compared with production of 309,000 tonnes in the first quarter of 2008 and 569,000 tonnes in the second quarter of 2007. The plants have a combined production capacity of 960,000 tonnes.

Aitken said Methanex was able to finance the Egypt project, pursue the acceleration of natural gas development in southern Chile, to sponsor new methanol and other growth initiatives and deliver excess cash to shareholders.

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By: Nigel Davis
+44 20 8652 3214

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