Poland's Synthos to see moderately improved PS margins: bank

29 October 2013 15:09  [Source: ICIS news]

LONDON (ICIS)--Poland's Synthos is set to see a moderate improvement in its polystyrene (PS) margins from next year but the long-awaited major recovery is not yet materialising, a bank said on Tuesday.

The company's PS business operated at an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 6% in 2011 and 2012 and a comparable figure is expected for 2013, said Raiffeisen Centrobank (RCB).

“However, we see that recovery in central and eastern Europe – the main market for Synthos in the PS segment – may drive the margin slightly upwards in the years to come to EBITDA profitability of approximately 8%,” said Dominik Niszcz, an RCB analyst.

European PS players have awaited a recovery since margins sank at the very beginning of the economic crisis in 2008, thanks largely to a combination of reduced construction and consumer demand and production over-capacity, he added.

“The golden times for Synthos in PS were in 2006 to 2007 when the company [then named Dwory] acquired Czech unit Kaucuk from Unipetrol [and its Polish parent PKN Orlen],” said Niszcz.

“Market weakness has related to the crisis and the overcapacities in Europe and, though since 2008 there have been some reductions in PS capacities, there have not yet been enough,” he added.

Synthos generates around 40% of its sales revenues from PS, while more than one-half derive from synthetic rubbers, RCB said.

The company’s stated expandable polystyrene (EPS) capacity is 200,000 tonnes/year, with its capacity for other PS, including  high-impact polystyrene (HIPS) and general purpose polystyrene (GPPS), is given as an overall 130,000 tonnes/year.

By: Will Conroy
+44 20 8652 3214

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