Mexico Mexichem swings to Q4 loss on higher costs

28 February 2014 00:12  [Source: ICIS news]

MEDELLIN, Colombia (ICIS)--Mexico-based chemical conglomerate Mexichem swung to a net loss of $11.8m in the fourth quarter from a year-ago profit of $7.59m, hurt by a jump in cost of sales and a higher income tax burden, the company said.

The company’s net sales in the fourth quarter reached $1.27bn, up by about 18% from $1.08bn in the prior-year quarter, while earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by 3.9% to $174.5m from $181.5m.

Mexichem, the largest producer of polyvinyl chloride (PVC) and vinyl resins in Latin America, said its cost of sales in the quarter increased by about 31% year on year to $940.2m, while income tax rose by about 61% to $39.7m in the same period.

For the whole of 2013, revenues increased by 8% to $5.17bn, mainly due to the consolidation of Wavin in the company’s integral solutions chain for the full year, adding an additional $466m of sales compared to 2012.

Mexichem acquired the PVC pipe maker in June 2012.

EBITDA for the full year fell by 7% to $891.1m, in part due to prices of refrigerant gases that hurt the company’s fluorine chain EBITDA result. Mexichem’s annual net income dropped by about 69% to $85.6m.

Mexichem said it made a first equity contribution of $23m to a joint venture (JV) with US-based Occidental Chemical (OxyChem) to build a 544,000 tonne/year ethane cracker at Ingleside, Texas.

The ethylene produced at the site will be used as feedstock for an existing vinyl chloride monomer (VCM) plant at Ingleside. OxyChem will sell the VCM to Mexichem to produce PVC in Mexico.

Plans are on schedule, with start-up expected in the first half of 2017, Mexichem said.

By: Simon West

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