17th February 2017, Bangkok
Indorama Ventures Public Company Limited (IVL), a leading chemical producer, has announced its fourth quarter and full year results for 2016. For the full year, the company reported a significant increase in its net profit of Baht 16.2 billion, an increase of 145% year-on-year.
Core EBITDA has grown by 25%. Core EBITDA for the PET segment grew at 19%, the Fibers segment increased by 8% while the Feedstock segment grew by 42%. Production volumes increased sharply by 24% to 8.7 million tonnes following the completion of two major acquisitions in April 2016 in relatively higher margin markets of USA and Europe.
These acquisitions in USA and Spain were aimed mainly at enhancing value addition and hedging the value chain by increasing feedstock integration while improving the overall financial performance of the company.
“Despite headwinds from a very challenging and low margin business environment, 2016 was a very satisfying year where we achieved our strategic and operational objectives while strengthening the balance sheet,” commented Aloke Lohia, Group CEO of IVL.
“The higher-volume PET and Feedstocks business delivered superior results. The High Value-added portfolio delivered nearly 50% of our EBITDA although it only contributes to 35% of our sales. Given its global scale, IVL is uniquely positioned to benefit as the demand-supply balance improves and the industry undergoes further consolidation going forward. This momentum of creating value add will provide significant growth opportunities and enhance our ability to deliver top and bottom line growth, as well as margin expansion.”
For the fourth quarter, the company achieved an EBITDA of THB 7.25 billion, an increase of 43% compared to the same period of the previous year. This was achieved as a result of higher volumes following the acquisitions made in 2016 and a higher overall operating rate of 86% versus 82% in 2015.
The existing businesses, excluding the above two mentioned acquisitions, were also reported to deliver superior performance reflecting the impact of ongoing operating excellence projects undertaken by the company in 2016. Production was higher, despite a flat operating rate reflecting the full-year impact of sites acquired in 2015, the company reports.
The company completed two acquisitions in 2016 and have several ongoing growth projects. The 440 KTA dual-feed, gas-based ethylene cracker purchased in Louisiana, USA, is undergoing renovation and is on target for completion by the end of 2017, offering 2018 as the first full year of earnings.
The PTA expansion in Rotterdam, the Netherlands, expected to come online in mid-2017 which will help the Company double its PTA capacity to 700 KTA thereby enabling full captive consumption for its PET facilities in EMEA. The company also announced the expansion of its HVA Performance Fibers tire-cord facility in China, as well as the expansion of its fibre capacity in Indonesia. The IPA facility in Spain is being prepared to double its production to 250 KTA.
“We have increased our capacity in the USA to 3.5 million tonnes, doubling over 2015. Another 500,000 tonnes of cracker capacity is due to start up in 2017 which will bring capacity to 4 million tonnes. IVL is now the only producer in EMEA of the HVA chemical Isophthalic Acid, an important precursor in PET, paints and coatings. We expect full year gains and synergy gains from these completed acquisitions and organic projects which take our total capacity to 12 million tonnes in 2017,” said Aloke Lohia.