Thailand’s IVL swings to Q4 net profit; eyes better demand in 2021

SINGAPORE (ICIS)–Thailand-listed Indorama Ventures Ltd (Ltd) expects demand recovery for its products to continue this year after it swung to a net profit of Thai baht (Bt) 1.61bn ($54m) in the fourth quarter of 2020.

Fourth-quarter earnings were driven by stronger production volumes and contributions from its polyethylene terephthalate (PET) business.

IVL’s overall production rose by 21% year on year to 3.48m tonnes in the fourth quarter. Core EBITDA at its combined PET business rose by 31% year on year to $177m in October-December 2020.

Thai baht (Bt) million	Q4 2020	Q4 2019	% change	2020	2019	% change
Net sales	83,460	77,509	8%	331,513	352,692	-6%
EBITDA	8,804	5,486	60%	29,424	28,914	2%
Operating income	3,471	1,022	240%	8,955	11,879	-25%
Net profit	1,606	-2,132		2,800	4,364	-36%

In 2021, the uptrend in crude oil prices is expected to positively impact its PET premiums this year and result in positive inventory valuation gains, IVL said in a statement.

“We see robust demand for PET and tightness in the market, which will be positive for spreads across our value chain of paraxylene (PX), purified terephthalic acid (PTA) and monoethylene glycol (MEG),” the company said.

Moreover, higher freight costs from Asia to Europe and Americas increases the landed cost (import parity) into these net importing western countries, and IVL stand to benefit from being a domestic producer in these markets, it said.

“Overall, we anticipate volumes growth to meet robust demand,” the company said.

In its integrated oxides and derivatives business, further recovery in monoethylene glycol (MEG) demand is expected this year, IVL said.

“We expect IVL to post solid Q1 earnings driven by higher PET spreads in both Asia and the west, healthy production volume, and continuing improvement in fiber and integrated oxides and derivatives units,” said Naphat Chantaraserekul, analyst at Thai brokerage Krungsri Securities.

The improvement at its oxides unit will be driven by methyl tertiary butyl ether (MTBE) as demand is recovering after lockdown in South America, its key export market, he added.

Higher crude oil price is improving the MEG benchmark price and the US shale gas advantage, widening MEG spreads, it said.

Crack margins have also recovered since the fourth quarter of last year, driven by strong derivatives demand and higher crude oil prices, the company noted.

The company said that its construction of an integrated PET/PTA plant at Corpus Christi in Texas, US is expected to be completed in 2024.

The plant is expected to produce 367,000 tonnes/year of PET and 433,000 tonnes/year of PTA.

Focus article by Nurluqman Suratman

($1 = Bt30.07)

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