Indorama Ventures Public Company Limited for the third quarter of 2012 achieved a consolidated sales of US$ 1,697 million (Baht 53,249 million), consolidated reported EBITDA of US$ 122 million (Baht 3,818 million), consolidated net profit after tax and minority of US$ 50 million (Baht 1,566 million), and a consolidated return on average net operating capital employed of 6% on an annualized basis.
The volume increased by 5% over 2Q12, from 1.35 million tonnes to 1.41 million tonnes in 3Q12, and the reported EBITDA increased by 17% to US$ 122 million in 3Q12.
IVL achieved a core EBITDA per tonne of US$ 78 in 3Q 2012 against US$ 112 in 2Q 2012. Core earnings were primarily impacted by significantly weak margins in the Asian business across the value chain of PTA, PET and Polyester due to the:
- Continuing Chinese slowdown, reflected by quarter on quarter drop in their economy for last many quarters on all major economic indicators.
- Continuing oversupply of PTA in Asia, weakening margins across the value chain in Asia in particular and to a lesser extent in Europe.
The MEG business and the North American PET and Polyester business were stable during the period. The overall demand for PET and Polyester was in line with historical trend and therefore the underlying fundamentals for Polyester value chain remains attractive. IVL's business model of global and product diversity as well as backward integration creates a meaningful hedge against weakness in a particular region or segment as reflected by its performance.
The losses due to Lopburi floods, the severe decline in PTA margins and the subdued sentiment in Asia have significantly impacted EBITDA in Asia since 4Q11, roughly on a third of company business. Management believes that overall improvement can be anticipated firstly from the operational improvement projects that have taken place in 2012; the debottlenecking of the China capacity to 522kt per annum, the start up of the Nigeria SSP plant, and the acquisition of PET capacity in Indonesia in 3Q 2012. Secondly, the improvement in the macro environment in China and India is anticipated to lead to an improved sentiments and therefore partial recovery of PTA margins that are currently below cash costs for the majority of the industry in Asia.
Regionally, North America remained the top performer while Europe was slightly weaker in light of the continued Greek-led crisis that has engulfed most of South Europe. Operational excellence measures at Spartanburg, a Brownfield capacity addition at Rotterdam, which is due to commence operations in 4Q 2012, as well as the addition of the Oxide and Glycols business in North America, will potentially offset the weak PTA and PET margins in Asia.