Weak ESBR prices hit Q4 profits at Poland's Synthos - bank

13 February 2013 13:01  [Source: ICIS news]

LONDON (ICIS)--Weakened emulsion styrene-butadiene rubber (ESBR) prices hit the profits of Polish synthetic rubber producer Synthos in the fourth quarter of last year, an investment bank said on Wednesday.

“While average quarterly butadiene [BD] prices retreated 4% quarter on quarter, ESBR pricing eased 6% quarter on quarter in [the fourth quarter] which, against an 8% styrene price rally driven by strong benzene prices, put a large dent in the product’s profitability,” analyst Piotr Drozd at WOOD & Company said in a note to investors.

The analyst calculated an implied fourth-quarter performance from a Synthos statement on its preliminary 2012 financial results, which showed the quarter’s net profit as 55% down against the same quarter of 2011 to zloty (Zl) 122.3m ($39.3m, €29.3) and revenues down by 5% to Zl1.4bn.

“Based on the preliminary results, [the fourth quarter] of last year was yet another poor quarter,” Drozd said.

“Although the top line stayed relatively resilient in [the fourth quarter], we note that, against a 15% year on year benchmark ESBR price decline, Synthos’ sales in [the fourth quarter] were most likely supported solely by volumes from the additional PBR [polybutadiene rubber] line [of 80,000 tonnes/year], in our opinion,” he added.

Drozd concluded that the outlook for Synthos in the first quarter of this year “remains uninspiring”, with BD prices down 5% month on month in January and flat in February, signalling no rebound in European demand just yet.

($1 = €0.74, $1 = Zl3.11, €1 = Zl4.18)

By: Will Conroy
+44 20 8652 3214

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