Mexico's Alfa triples second-quarter profits on 42% revenue jump

20 July 2011 22:29  [Source: ICIS news]

MEXICO CITY (ICIS)--Alfa’s second-quarter earnings nearly tripled to $182m from $61m in the same period last year on a 42% increase in revenue, the Mexican industrial conglomerate said on Wednesday.

Revenue for the period rose to $3.786bn (€2.688bn) from $2.670bn during the second quarter of 2010, Alfa said.

The parent company of Alpek and Newpak, its chemical and natural gas subsidiaries, respectively, registered $445m in earnings before interest, taxes, depreciation and amortisation (EBITDA) – an increase of 38% on the year.

Making up half the total sales for Alfa, Alpek reported $1.895bn in sales and $211m in EBITDA for the quarter, up 54% and 66% year-on-year, respectively.

Alfa president Alvaro Fernandez hailed Alfa's success amid the worldwide underperformance of many companies. He cited Alpek’s revenue growth.

Sales volumes at Alpek increased, and the polyester business continued with good margins,” said Fernandez.

Fernandez also noted that the company had agreed to purchase Wellman's US polyethylene terephthalate (PET) plant in Bay St Louis, Mississippi, for an estimated $185m, expecting the transaction to close in the second half of 2011. That plant has a capacity of 430,000 tonnes/year.

Alfa said much of the EBITDA increase came from the integration of Alpek's recently acquired assets in Columbia, South Carolina, “on top of strong industry dynamics”.

In February, Alfa’s DAK Americas subsidiary said it completed the acquisition of Eastman Chemical’s PET and purified terephthalic acid (PTA) business, including three plants in Columbia. The EBITDA for Alpek's polyester chain rose 90% year-on-year.Alpek’s plants in the polyester chain continued to operate at high levels. Moreover, the supply-demand balance for plastics and specialty chemicals remained tight, which allowed for sequential increases in volumes and margins,” Alfa said.

The company said that soaring oil prices during the second quarter drove feedstock prices higher and produced record margins in the PET and PTA markets. The limited global capacity to produce caprolactam and rising Chinese demand also contributed to higher sales.

Alfa noted, however, that cotton prices seemed to be moderating, indicating that the polyester market may soon begin to cool.

($1 = €0.71)

By: James Young

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