Rouble slump drives SIBUR 2014 profit down 45%

LONDON (ICIS)–SIBUR’s net profit for 2014 slumped 44.8% year on year to Russian roubles (Rb) 25.1bn (€385.1m) as a result of massive foreign exchange losses due to the falling value of the currency in the second half of the year, the petrochemicals producer said on Wednesday.

The Rb85.4bn foreign exchange loss posted for the year offset a 30.3% year on year increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) to Rb102.8bn on the back of threefold earnings growth for the company’s petrochemicals operations.

Revenues also grew 33.8% year on year to Rb361bn, SIBUR added. Despite heavy forex losses, the depreciating rouble was positive for revenues and earnings, as sale prices for the majority of its products are linked to international commodity prices quoted in dollars and euros, while operational expenses are predominantly rouble-based, the company added.

The fall in oil prices, economic and trade sanctions from the EU and the US, and the crisis in Ukraine have all served to weigh on the value of the rouble, which impacted the financial results of numerous companies in the country for 2014.

The value of the rouble relative to the euro has fallen from under 40:1 in early-2013 to over 65:1 today, from peaks of over 85:1 in December 2014.

Sales volumes of polypropylene (PP) rose nearly two-fold year on year to 397,700 tonnes following the ramp up of production capacity at its Tobolsk-Polymer site in the country.

The Tobolsk-Polymer site comprises a propane dehydrogenation (PDH) plant and a PP unit, and work to increase capacity at the site over the course of the year was the key driver of a 68.3% year on year increase in polymer sales during 2014, the company added.

Plastics revenues were also buoyed by higher polyethylene terephthalate (PET) and biaxially oriented polypropylene (BOPP) sales volumes. Total petrochemical products sales for the year were 2.25m tonnes, a 5.6% year on year increase, SIBUR added, leading to a 14.2% increase in revenues for the division over the year to Rb132.5bn.

Synthetic rubber products earnings remained under pressure on the back of a negative market, SIBUR sad, with revenues for the division dropping 14.1% year on year to Rb27.8bn.

Energy division sales increased by over 50% year on year to Rb217.2bn due in large part to a scaled up naphtha trading arm following the launch of the Ust-Luga transhipment facility at the end of 2013, the company added.

(€1 = Rb65.18)