Currency exchange woes cause 84% drop in Mexichem Q4 profits

21 February 2012 21:34  [Source: ICIS news]

MEXICO CITY (ICIS)--Mexichem’s fourth–quarter earnings fell by 84% to pesos (Ps)147m (11.5m, €8.7m) as a result of currency devaluation, the Mexico-based polyvinyl chloride (PVC) producer said on Tuesday.

“Net profit is mainly affected by the 12.6% devaluation of the Mexican peso [from Ps12.38 to Ps3.94 per dollar],” Mexichem said.

The company reported a 13% rise in sales to Ps10.8bn during the same period.

Mexichem also said it saw earnings before interest, taxes, depreciation and amortisation (EBITDA) rise by 23% to Ps3.6bn during the fourth quarter.

Mexichem said it saw the full effect of new revenue streams in 2011 as a result of the acquisitions of flourochemicals producer INEOS Fluor, and Mexican PVC and pipe making companies Policyd and Plasticos Rex.

In early 2011, the firm also acquired thermoplastic compound maker Alphagary.

Mexichem said that despite the addition of low-margin producers such as Alphagary and Policyd, the chloro-vinyl chain showed a 5.2% increase in profit margins for all of 2011 compared with 2010.

Mexichem reported a 31% boost in sales to Ps47.6bn for all of 2011 and a 26% in EBITDA to Ps10.27bn.

However, foreign exchange issues caused earnings to fall by 30% to Ps2.76bn for all of 2011.

Looking forward, Mexichem said its purchase Dutch PVC pipe producer Wavin would its plastic piping solutions business.

($1 = Ps0.078) ($1 = €0.76)

By: James Young

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