Mexico’s Mexichem Q1 income halved on higher costs, strong peso

30 April 2013 23:17  [Source: ICIS news]

MEDELLIN, Colombia (ICIS)--Mexichem’s Q1 net income fell by 54% to Mexican pesos (Ps) 836m ($67m, €51m) as a result of higher production costs and currency exchange loss, the Mexico-based chemical conglomerate said on Tuesday.

Quarterly revenues were up by 14% to Ps15.5bn, driven by higher prices in the chlorine-vinyl chain and the integration of Wavin in the consolidated results.

Mexichem acquired the PVC pipe maker in June 2012.

Increased revenue was partially offset by reduced sales in the company’s chlorine-vinyl and fluorine chains, which were down by 20% and 24%, respectively.

The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) stood at Ps2.7bn, down by about 7% from 2.9bn in the prior-year quarter.

Mexichem, the largest producer of polyvinyl chloride (PVC), vinyl resins and compounds in Latin America, said it was on track to meet growth forecasts in 2013.

The company confirmed the acquisition of the PVC resin operations of US firm PolyOne, adding that the sale was awaiting approval by US regulatory authorities.

The company also said that it was awaiting conclusion of a feasibility study for the construction of an ethane cracker in the US.

In August, Occidental Chemical (OxyChem) and Mexichem signed a memorandum of understanding to evaluate the creation of a joint venture to build a 500,000 tonne/year ethane cracker. OxyChem would use nearly all of the ethylene as feedstock to produce 1m tonnes of vinyl chloride monomer (VCM) at its complex in Ingleside, Texas, Mexichem said at the time.

OxyChem would then sell the VCM to Mexichem under a long-term contract.

The cracker could begin operations in 2016, Mexichem said.

($1 = €0.76; $1 = Ps12.13)

Additional reporting by Al Greenwood

By: Simon West

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