Poland's Synthos Q3 net profit down by 61% year on year

13 November 2012 12:11  [Source: ICIS news]

LONDON (ICIS)--Third quarter net profit at Poland's Synthos fell by 61% year on year to zlotych (Zl) 111m ($33.84m, €26.62m) from Zl283m in the third quarter of 2011, as weakening tyre demand hit emulsion styrene butadiene rubber (SBR) margins, the company said on Tuesday.

Sales revenues rose by 5% to Zl1.59bn, while operating profit fell by 59% to Zl134m from Zl323m in the third quarter of 2011, it added.

The decline in earnings before interest, tax, depreciation and amortisation (EBITDA) margin of Synthos' synthetic rubber segment surprised analysts at Prague-based investment bank WOOD & Company.

“Against a 29% year on year fall in the [emulsion SBR] prices and a similar decline in feedstocks vs Q3 2011, the segment's EBITDA margin eroded to 13.4% in [the third quarter], vs 27.3% last year, and our expectations of 16.6%,” said Piotr Drozd, an analyst at the bank.

Margin erosion was also visible in other segments, he added.

“The styrenics segment, facing headwinds in the form of high styrene prices, also experienced stronger-than-expected margin erosion in [the third quarter] – a 3.4% EBITDA margin vs our expectations of 4.6% and 4.9% in [the second quarter]. Vinyl dispersions posted an even larger margin squeeze, 5.6% vs our expectations of 8.9%,” Drozd noted.

Looking ahead, Drozd said he was expecting an 8-10% global tyre sales decline in 2013, and continued weakness in the benchmark emulsion SBR and butadiene (BD) prices.

($1 = €0.79)
($1 = Zl3.28, €1 = Zl4.17)

By: Will Conroy
+44 20 8652 3214

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