29 July 2010 19:13 [Source: ICIS news]
LONDON (ICIS)--Plastic sector sales at Belgium-based producer Solvay climbed 48% year on year in the first six months of 2010 to reach €2.0bn ($2.6bn), the company said on Thursday.
On a sequential basis, second-quarter plastic sales improved by 19% to €1.1bn, while operating results were €114m, significantly higher than the €59m recorded in the first quarter.
Jacques van Rijckevorsel - general manager of the plastic sector - attributed the significant rise in both sales and profits to adverse winter weather conditions and a slow start to the year.
Rijckevorsel added that the sharp increase in sales was also largely due to the strong Asian demand for “specialities”, which incorporated the speciality polymers sector and its soon-to-be-divested Inergy Automotive Systems business.
Indeed, according to Rijckevorsel, a quarter of overall speciality polymer sales were concluded in ?xml:namespace>
This had a significant bearing on overall operating profits, according to Solvay CEO Christian Jourquin. He said that €55m of working capital had been a been a direct result of the favourable US dollar to euro exchange rate, which continued to facilitate competitive European exports and shield the European market from imports.
While sales in the vinyls sector were improving compared to the low levels of 2009, Jourquin noted that the absence of a recovery in the construction industry continued to cap the potential margins in both Europe and Mercosur.
The company’s subsidiary Pipelife was also limited by the “stagnant European construction sector” and the harsh weather conditions at the start of the year, it said, with first half 2010 sales falling below the levels seen in the same period of 2009, Jourquin said during an investors conference call.
Although there was no clear figures from the company regarding the earnings of the vinyls sector, Rijckevorsel outlined that speciality polymers accounted for the majority of plastics recurring earnings before interest, tax, depreciation and amortisation (REBITDA), followed by vinyls, Inergy Automotive, and Pipelife.
Rijckevorsel also noted that a healthy demand from the non-EU automotive and electronics industries had buoyed plastics demand. This was projected to grow throughout 2010, with total REBITDA estimated to reach €30m by the end of year, Jourquin said.
Jourquin concluded that the first half of 2010 had been characterised by demand recovery for plastics, and that the volume growth should support REBITDA estimations.
However, he added that he was anticipating a fall-off in the second half of 2010 as the market entered its traditionally-slower holiday season.
($1 = €0.77)
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