Thai Indorama Q2 profit falls 28% from Q1 on global commodity woes

14 August 2012 18:50  [Source: ICIS news]

LONDON (ICIS)--Indorama Ventures’ second-quarter net profit fell 28%, to $39m (€32m), from the first quarter, mainly because of inventory losses and markdowns in the wake of the global commodity downturn, the Thailand-based international polyester major said on Tuesday.

However, Indorma Venture’s "core net profit" - before exceptional items and inventory gains and losses - was $54m for the three months ended 30 June, up from $17m in the first quarter, partially driven by a 13% quarter-on-quarter increase in volumes.

Sales were $1.74bn, compared with $1.69bn in the first quarter.

Indorama said that its segment earnings before interest, tax, depreciation and amortisation (EBITDA) increased quarter-on-quarter across all its platforms with the addition of new businesses.

"The last 12 months have witnessed extreme volatility that closely shadows what we experienced in the second half of 2008,” said CEO Aloke Lohia.

“There was a considerable squeeze in inventory across the industry then, which led to a total collapse of commodity prices, and we have seen it happen again in fourth quarter of 2011 and yet again in second quarter of  2012,” Lohia said.

“This time, though, we are also experiencing a slowdown in growth in Asia, particularly China and India,” he added.

Purified terephthalic acid (PTA) spreads in June 2012 reached their historical bottom of $50/tonne, “a stark decline from the record high of $400 in March 2011”, he added.

“We will have to be more patient and wait for a rebound in growth, something we expect to have a positive impact on the company, just as in 2009 and 2010,” he said.

"Our enduring top-line growth, despite the unstable global markets, is a testament to Indorama Ventures' business, which is a 'bridge' between upstream chemical suppliers and consumer staple products, which makes us much more resilient in economic downturns," Lohia said.

($1 = €0.81)


By: Stefan Baumgarten
+1 713 525 2653



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