US TPC Group swings to $700,000 fiscal Q2 loss; sales rise 17%

03 March 2011 22:30  [Source: ICIS news]

HOUSTON (ICIS)--TPC Group reported a $700,000 (€504,000) net loss in its fiscal second quarter ended 31 December, down from a $8.4m net income in the year-earlier period, the US butadiene (BD) producer said on Thursday.

In comparison with the same period in 2009, TPC did not receive $17.1m in insurance money during the latest quarter, it said.

The 2009 period included insurance claims related to 2008’s Hurricane Ike. Excluding that, gross profit for the 2010 quarter was $59.2m, up 21% from $49.0m in the 2009 quarter.

Sales totaled $486.1m, up 17% from $415.8m in the year-earlier period as average selling prices surged by 30%. Volumes, meanwhile, contracted by 10%.

“Despite the seasonal slowdown we typically experience in November and December, global economic growth is allowing us to take advantage of our product slate and improve margins,” said TPC chief executive Charlie Shaver.

“Prices in North America for butadiene improved during the later part of the quarter after falling significantly from September levels as the market became better balanced,” he added.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) were $19m, nearly doubling $10.2m in the prior-year quarter.

The fiscal second quarter was the second and final quarter of a six-month transition period for TPC as it realigns its financial reporting periods. It's new fiscal year began on 1 January.

For its fiscal 2011 first quarter, which will end on 31 March, TPC said it expects adjusted EBITDA to improve sequentially to between $24m-28m.

“Butadiene prices have been higher each consecutive month this year and natural rubber prices have traded near all-time records,” Shaver said.

“This upward momentum is also supportive of margin expansion, especially in our isobutylene derivative products," he added.

Shaver noted that many of TPC’s customers were experiencing growth in existing markets and had announced programmes to re-invest capital.

“In support of this growth, we are running our plants at high utilisation rates and working to find new ways to optimise and extract value,” he said. “In addition, we are reviewing capital and non-capital options to de-bottleneck certain units. 

“Overall, current trends are creating a favourable environment for the production of butadiene… and other related products,” he said.

For more on BD visit ICIS chemical intelligence

By: Ben DuBose
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