Turkey's Petkim profitability 'disappointing' – Erste Group Bank

06 September 2011 17:27  [Source: ICIS news]

LONDON (ICIS)--Turkey's sole major petrochemical producer Petkim is failing to hit profitability expectations despite there being no sign of a fall-off in petrochemical demand in Turkey, Austria's Erste Group Bank said on Tuesday.

“It is a bit disappointing, as the market environment for petrochemical producers was still very friendly in 2Q,” Erste said in an analysis of the firm.

“From today’s perspective, it appears as if Petkim will not manage to reach our full-year estimates [even though with] fears of an economic slowdown across the globe resurfacing, there is no indication of diminishing petrochemicals demand in Turkey yet,” it added.

Petkim cited higher naphtha feedstock costs when reporting that its second-quarter net profit fell to Turkish lira (TL) 30.8m ($17.4m, €12.4m) from TL44.5m a year ago. Erste said a consensus of analysts had forecast a figure of TL40m.

“Our sceptical long-term view remains valid, as we believe that the still elevated level of naphtha prices could create a real competitive disadvantage for naphtha-based producers such as Petkim compared to those petrochemicals producers using [ethane made from] cheap natural gas,” the bank added.

($1 = TL1.77, €1 = TL2.49)

By: Will Conroy
+44 20 8652 3214

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