Price and market trends: Styrolution mulls greenfield investment in an emerging market country

06 September 2013 09:57  [Source: ICB]

An investment of €100m-150m could be made in a new specialty styrenics plant

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.

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

Gualdoni seeks higher growth 

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. Also, the firm'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 acrylonitrile butadiene styrene (ABS), acrylonitrile styrene acrylate (ASA) 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 current return 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 an 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 about 1.6 times EBITDA from 2.5 times EBITDA when the firm was launched, Gualdoni said.

By: Nigel Davis
+44 20 8652 3214

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