Indorama Q2 profit jumps on higher-value products contribution

05 August 2014 16:52 Source:ICIS News

LONDON (ICIS)--Indorama Ventures’ (IVL’s) net profit after tax and minority for the second quarter of the year after tax and minority interests jumped to Thai baht (Bt) 1.48bn ($46m), from Bt214m during the same period in 2013, on the back of a stronger contribution from higher-value products, the Thailand-based polyethylene terephthalate (PET) producer said on Tuesday.

The sharp year-on-year rise in post-tax profits was also due to a Bt1.13bn inventory impairment recorded during the second quarter of 2013, the company added.

Consolidated sales increased 9% year on year to Bt64bn, and core earnings before interest, tax, depreciation and amortisation (EBITDA) increased 19% over the same period to Bt5.11bn, Indorama added.

The company’s high value added (HVA) division’s core EBITDA  increased 66% year on year to $124m during the first half of the year, driven by stronger volumes on the back of consolidation of Germany-based polyester fibre producer Trevira, which Indorama led a consortium to acquire in 2011.

The company also acquired another Germany-headquartered company, PHP Fibers, alongside Japan’s Toyobo. The polyamide and polyester producer is counted as part of the company's HVA division and was another strong contributor to the HVA business, Indorama added.

The company is looking to develop HVA earnings to 25% of total capacity in the long-term, which it says will be driven by acquisitions of more specialty companies.

IVL is actively pursuing such inorganic growth to add more functionality to our products portfolio,” the company said.

“The next phase of growth for IVL will be in non-commodity, HVA differentiated businesses, whether in polyester, nylon 6,6 or polypropylene-based (PP) fibres,” CEO Aloke Lohia said in an interview with ICIS in June this year.

Indorama noted that overcapacity in China’s purified terephthalic acid (PTA) sector continues to weigh on the company’s feedstock operations, but claims that the sector doldrums may have bottomed out:

is optimistic that the bottom has been reached with most producers operating at below cost over last two years, which has led to industry restructuring and better producer discipline,” the company said.

Second-quarter feedstock division core EBITDA still grew strongly year on year to Bt1.51bn compared to Bt378m in the second quarter of 2013. Fibres and yarns division earnings dropped slightly year on year to Bt1.08bn, and feedstock PET earnings fell 6% over the same period to Bt2.59bn.

After-tax profit for the first half of the year jumped sharply to Bt1.84bn, compared to Bt705m in the first half of 2013 and first-half revenues grew 12% year on year to Bt125.7bn, while core EBITDA grew 44% over the same period to Bt10.2bn.

($1 = Bt32.20)

By Tom Brown