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Earnings Release
IVL Achieves US$1.7 billion in sales in Q2 2012 Business in the West remains firm despite Asian PTA weakness
Aug 14, 2012
Bangkok, Thailand - 14 August 2012 - Indorama Ventures Public Company Limited (IVL), the world's leading vertically integrated Polyester Value Chain producer, achieved consolidated sales of US$ 1,741 million in the second quarter of 2012 (Q2/2012) and a core EBITDA of US$ 151 million and core net profit after tax and minority (excluding exceptional items and Inventory gain/loss) of US$ 54 million. This strong result under current economic conditions was driven partially by volume growth of 13% over Q1 2012, from 1.19 million tons to 1.35 million tons, which has translated into 80% growth of the core EBITDA and 227% growth in core Earning Per Share (EPS).
 
The recent acquisition of Old World, now renamed Indorama Ventures (Oxide & Glycols) in North America in April 2012 has added a new line of business to IVL and has enabled the group to integrate into MEG (a major feedstock for making Polyester products) for the first time, making IVL the only global polyester producer with integration into both PTA and MEG. With the acquisition, IVL also gained about 30% market share of merchant PEO (Purified Ethylene Oxide) in North America. Indorama Ventures (Oxide and Glycols) Limited has been incorporated for the first time in IVL in Q2/2012 and is one of the key drivers of earnings growth in the period.
 
IVL achieved a Core EBITDA per ton of US$ 112 in Q2/2012 compared with US$ 71 in Q1/2012. The segment EBITDA increased across all platforms with the addition of new businesses. Regionally, North America remained the top performer while Europe was slightly weaker but not significantly so.
 
IVL net operating debt to equity is 1.1 times in Q2/2012 following the acquisition of Indorama Ventures (Oxide and Glycols) Limited in April 2012, which is higher than the 0.6 times at the end of year 2011.
 
The global commodity downturn in Q2/2012 resulted in a significant inventory loss and markdown of US$ 46 million among other issues led to net profit after tax and minority in Q2/2012  of US$ 39 million, a decrease of 28% over 1Q 2012 net profit of US$ 55 million. PTA spreads in June 2012 reached their historical bottom of $50 per ton, a stark decline from the record high of $400 in March 2011.
 
Mr. Aloke Lohia, Group CEO of Indorama Ventures explained, "Operational excellence measures at Spartanburg, a Brownfield capacity addition at Rotterdam, due to commence operations in 3Q 2012, as well as the addition of the Oxide and Glycol business in North America, will potentially offset the weak PTA margins in Asia, which will remain low throughout 2012. Our plants will continue to operate at high utilization rates and benefit from the increase in captive consumption of PTA of above 50% in our PET polymers and Polyester fibers and yarns business.
 
"The company has completed acquisitions of hygiene segment leader, FiberVisions, with operations in America, Europe and China in January 2012 and this places IVL as a leading global player in this fast-growing segment. Furthermore, the acquisition of the recycled PET and fiber manufacturing businesses of Wellman International in Europe in November 2011 makes IVL Europe's most prominent producer, with a footprint across the polyester value chain."
 
Mr. Lohia went on to explain that, "The last 12 months have witnessed extreme volatility that closely shadows what we experienced in the second half of 2008. There was a considerable squeeze in inventory across the industry then, which led to a total collapse of commodity prices, and we have seen it happen again in Q4/2011 and yet again in Q2/2012. This time, though, we are also experiencing a slowdown in growth in Asia, particularly China and India. We will have to be more patient and wait for a rebound in growth, something we expect to have a positive impact on the company, just as in 2009 and 2010.
 
"Our enduring top-line growth, despite the unstable global markets, is a testament to Indorama Ventures's business, which is a "bridge" between upstream chemical suppliers and consumer staple products, which makes us much more resilient in economic downturns," Lohia said.
 
In line with the affordable nature of Polyester and its application in daily consumer staples (food, beverage and clothing), the company expects to benefit from a favorable geographical mix in key regions where it has attained market leadership and consolidation.
 
"Our investments in innovation or value-added product lines are expected to gain traction going forward and to provide new growth areas for IVL, especially in emerging markets," said Mr. Lohia. "We are well-positioned to take significant advantage when the global recovery takes place."
 
 
 
About Indorama Ventures 
Indorama Ventures Public Company Limited, listed in Thailand (Bloomberg ticker IVL.TB) is the world's leading producer in the polyester value chain, with a global footprint and manufacturing across Africa, Asia, Europe and North America. Its products serve major players in consumer staples. The company's main products are PTA, PET, Polyester fibers and yarns and Ethylene Oxide/Glycols, which are distributed across the world. IVL has 9,000 employees worldwide and 2011 consolidated revenue of US$ 6.1 billion.