Synthos profits in styrenics on in-house feedstock advantage: analysts

20 November 2013 15:47  [Source: ICIS news]

LONDON (ICIS)--Styrenics are driving profitability at Poland's Synthos, which is maintaining a cost advantage through in-house styrene production, analysts said on Wednesday.

The margin between polystyrene (PS) and ethylbenzene on which Synthos's styrene production is based was “at its highest for many quarters”, noted Dominik Niszcz, an analyst at Raiffeisen Centrobank (RCB).

PS prices have risen on higher styrene input prices but, thanks to its in-house styrene production, Synthos has not lost out on this cost pressure, Niszcz added.

Synthos, which this year has seen a substantial decline in demand for its main product, synthetic rubber, recorded third-quarter styrenics earnings before interest, tax, depreciation and amortisation (EBITDA) of zloty (Zl) 57.1m ($18.4m, €13.7m), a significant improvement year on year.

Despite depressed profitability in the second quarter when Synthos's PS and expandable polystyrene (PS) saw a 2.6% EBITDA margin, Synthos’s PS and EPS margins surged in the third quarter to an EBITDA margin of 9.5%, investment bank WOOD & Company said.

A 4% quarter-on-quarter decline in the benzene price also helped the company's styrenics business in the third quarter, it said.

However, WOOD & Company chemical industry analyst Piotr Drozd cautioned: “As styrenics are strongly seasonal products, with the sales volumes peaking in Q3, [typically] dropping around 20% quarter on quarter in Q4 and reaching a low in Q1, we expect the segment’s positive earnings contribution to ease in the following quarters, increasing Synthos’s exposure to the underperforming rubber segment.”

($1 = €0.74,
$1 = Zl 3.10, €1 = Zl 4.18)

By: Will Conroy
+44 20 8652 3214

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