Mexico Mexichem Q2 net income falls 52% on higher costs

23 July 2014 22:45 Source:ICIS News

HOUSTON (ICIS)--Mexico-based vinyls producer Mexichem reported on Wednesday a Q2 net income of $49.8m, down 52% from $104.6m reported from the same time last year because costs rose faster than sales.

The performance was consistent with the company's guidance, it said.

Mexichem reported Q2 net sales of $1.46bn, up 8% from $1.35bn from the same time last year. The company attributed the rise to increased capacity, the company's pipe operations in Europe and the addition of a specialty resins business.

However, Q2 cost of sales were $1.05bn, up 13% from $932.8m from the same time last year.

Operating expenses, financial costs and other expenses also rose faster than sales.

Overall, Mexichem said its Q2 net income was dragged down by unfavourable foreign exchange rates and higher amortisation following acquisitions.

Looking ahead, the company should benefit from additional capacity, improved operations, better product mix and better pricing, Mexichem said.

However, the company will also contend with ethylene shortages, which will create shortages of vinyl chlorine monomer (VCM), Mexichem said. VCM is used to make polyvinyl chloride (PVC).

By Al Greenwood