Indorama swings to $5m Q4 2012 net profit despite China slowdown

22 February 2013 16:08  [Source: ICIS news]

LONDON (ICIS)--Indorama Ventures generated $5m (€3.8m) in net profit during the fourth quarter of 2012 compared with a net loss of $73m during the same period in 2011, despite a continuing slowdown in China, the Thailand-based polyester company said on Friday.

Group core earnings before interest, tax, debt and amortisation (EBITDA) for the quarter was $100m, compared with $82m during the same period in 2011, while sales were up slightly at $1.65bn compared with $1.39bn in the fourth quarter of 2011.

The fourth quarter of the year is seasonally the weakest of the year for Indorama’s operations, the company said.

Indorama attributed weak quarterly profits to the impact on market sentiment caused by the ongoing slowdown in Chinese economic growth, and exacerbated by continuing oversupply of purified terephthalic acid (PTA).

“Continuing oversupply of PTA in Asia ...  is weakening spreads across the value chain in the region and is marginally impacting the western markets, in particular the South European markets for PET [polyethylene terephthalate], which seems to have larger appetite for the risk associated with imports,” the company said.

Polyester margins are also being put under pressure by the competition from Chinese companies, exacerbated by a weak economic climate, according to Indorama.

“Newly integrated polyester value chain companies in China are increasing their market share during a period of weak economic climate and therefore pushing margins to un-sustainable levels and in many cases below the cash cost of independent operators in both the PTA and PET segments,” the company added.

Despite economic weakness and oversupply in Asia, the fundamentals of the polyester value chain remain attractive, the company added.

Net profit for the full year 2013 was $148m compared with $510m in 2011 despite a $678m year-on-year increase on sales during the period to $6.78bn. Full-year core EBITDA was $451m compared with $555m in 2011. Indorama is targeting $575m in EBITDA for 2013, it said.

($1 = €0.76)

By: Tom Brown
+44 208 652 3214

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