InterviewStryolution ready to invest further in emerging market growth

29 August 2013 17:59  [Source: ICIS news]

LONDON (ICIS)--Styrolution can consider investing €100m to €150m ($133m to $200m) in a greenfield specialty styrenics production facility in an emerging market to help accelerate growth, CEO Roberto Gualdoni said on Thursday.

The investment would be made with a local partner, but Styrolution would fund such an investment from its own cash flow, he said.

Styrolution's management wants to shift the company’s portfolio more towards the emerging and faster-growth markets in South and East Asia, as well as Latin America. In addition, the company's current strategy is to focus more closely on specialty styrenic plastics in five specific higher-growth markets: automotive, household appliances, medical electronics and construction, the CEO added. 

An investment could be made in a material such as specialty ABS (acrylonitrile butadiene styrene), ASA (acrylonitrile styrene acrylate), or transparent ABS.

Styrolution has said that it aims to push its return on earnings before interest tax, depreciation and amortisation (EBITDA) before any special items to 10% by 2020. The return currently is about 6%, according to media reports on 28 August.

Gualdoni said that close to 90% of a €200m cost-reduction target for the company would be achieved by the end of this year through synergies developed since the merger of the BASF and INEOS' styrenics assets into the joint venture, which began operating in October 2012.

“We have a great constellation [of operations]”, Guladoni said in a telephone interview with ICIS. “It’s really working.” Further costs savings can be made, he suggested, but through on-going business process improvements.

Styrolution has cut some of its commodity styrene polymers capacity, but has been adding specialty production capabilities. Cash generated from the business has been used to pay down debt, which is currently about 1.6 times EBITDA from 2.5 times EBITDA when the company was launched, Gualdoni added.

Styrolution said this month that its net income in the first half of 2013 was down 2.2% at €48m on sales down 2% at €3.01bn. Styrolution saw much stronger profits from its Europe, Middle East and Africa polymers segment in the first half of the year, and from polymers in Asia, along with higher profits from the Americas polymers operations but lower styrene monomer profits.

($1 = 0.75)

By: Nigel Davis
+44 20 8652 3214

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