US TPC Q3 net income falls 27% but benefits from butadiene prices

10 November 2011 23:33  [Source: ICIS news]

HOUSTON (ICIS)--TPC Group benefited from a boost in butadiene prices in the third quarter, but its net income fell by 27% year-on-year to $9.4m (€6.9m) from $12.8m because of higher bond interest costs, the US producer said on Thursday.

The drop in net income reflected a higher interest of $5.4m on 8.25% senior secured notes issued in October 2010, the company said.

However, gross profit (revenue minus the cost of sales) rose to $87.0m from the same quarter last year, TPC said.

“The positive impact of the timing of rising butadiene prices on gross profit in the current year quarter was $15m versus a negligible impact in the prior year quarter during which butadiene pricing was much more stable,” TPC said.

Revenue for the quarter ended 30 September rose by 67% to $835m from $499m in the same quarter.

TPC’s C4 processing business segment revenue increased by 79% to $397.9m, driven primarily by higher prices, due to tighter markets, which in turn were caused by the shift from heavier to lighter cracker feedstock and higher unleaded regular gasoline prices, the company said. 

Looking forward, CEO Mike McDonnell warned of a challenging fourth quarter as “the market will come back into balance in early 2012”.

“During the latter part of the third quarter, and thus far in the fourth quarter, we have seen an abrupt softening in demand for butadiene, which has resulted in substantial declines in butadiene pricing in October and November and expected further declines in December,” McDonnell said.

US butadiene (BD) contracts for November fell on average by 18% in the first single settlement for the US contract in eight months.

($1 = €0.74)

By: Brian Ford
+1 713 525 2653

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