Alpek 1Q earnings down as polyester feedstock price plummets

MOSCOW (MRC) -- Mexican petrochemicals firm Alpek reported a 14% year-on-year drop in first quarter revenue, impacted by a steep decline in polyester feedstock prices, said Bnamericas.

Alpek's net income dropped 61% to USD24mn compared to 1Q13, but rose from a USD9mn loss in 4Q13.

Alpek's polyester segment was hit by the recent drop in feedstock prices, which led to a USD22mn inventory devaluation charge and created "a temporary mismatch between sales prices and average feedstock costs that negatively impacts margins," according to the firm's financials.

First quarter Ebitda was USD105mn, down 34% year-on-year and 20% from the fourth quarter. The company invested USD44mn in projects during the first quarter. Alpek's Cosoleacaque cogeneration plant is slated to begin operations in 2Q.

Alpek's drop in revenues impacted parent company Alfa, which reported a 38% year-on-year drop in first quarter profits. Alfa invested USD236mn in 1Q to support future growth, mainly through energy projects.

As MRC wrote before, Russian ONK and Alpek in September 2013 signed an agreement for joint project for construction of PTA and PET plant in Ufa (Russia). )

Alpek is the largest petrochemical company in Mexico and the second largest in Latin America. The company operates through two business segments: Polyester chain products (PTA, PET and polyester fibers), and Plastics and Chemicals products (PP, EPS, caprolactam, polyurethanes and other specialty and industrial chemicals). Alpek is a leading producer of PTA and PET worldwide, operates the largest expandable polystyrene plant in America and one of the largest polypropylene plants in North America. It is also the only producer of caprolactam in Mexico. The company operates 20 plants in Mexico, USA and Argentina, and employs 4,700 people. Alpek is a publicly traded company listed on the Mexican Stock Exchange.
MRC

MOSCOW (MRC) -- Akzo Nobel NV said that first-quarter net profit was up 45% on lower financing costs, while revenue fell 2% because of currency losses and despite higher volumes in all of its businesses, said The Wall Street Journal.

Net profit for the first three months of the year was EUR129 million (EUR178 million) compared with EUR89 million a year earlier.

Akzo Nobel, one of the world's leading paint and coatings makers, said revenue slipped to EUR3.38 billion from EUR3.47 billion a year earlier. While rising volumes and higher priced goods added 4% to sales, foreign exchange rates had a negative impact of 5%.

Under the leadership of Chief Executive Ton Buchner, Akzo Nobel set new financial targets for 2015 and accelerated plans to further streamline the paints and chemicals group.

Akzo Nobel, best known for paint brands such as Dulux and Sikkens, said it remains on track to reach its 2015 financial targets. It aims to achieve a 9% return on sales, a 14% return on invested capital and a net debt to earnings before interest, taxes, depreciation and amortization ratio lower than 2.0.

"These results are a further step towards the delivery of Akzo Nobel's 2015 targets," Chief Financial Officer Keith Nichols said. "Despite higher restructuring charges, continued adverse currency effects and ongoing weakness in Europe, our year-on-year return on sales, both before and after higher restructuring charges, improved for the third consecutive quarter."

Akzo Nobel's return on sales rose to 6.4% in the first quarter, from 6.3% in the first quarter of 2013. Excluding restructuring costs, its operating margin stood at 7.7%, up from 7.1%.

As MRC wrote before, AkzoNobel has completed the sale of its Primary Amides chemicals business to PMC Group effective December 31, 2013.

Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people.
MRC

MOSCOW (MRC) -- The construction of a petrochemical hub in West Virginia, by Odebrecht for Brazil’s Braskem has been boosted recently, as per Plastemart.

Almost 50% of the projects gas needs- about 30,000 bpd has been agreed to be supplied by Antero Resources, an independent gas and oil company The Appalachian Shale Cracker Enterprise (Ascent) is in a phase of economic and technical viability studies, and if it goes ahead, it's expected to start operating by the end of the decade, reported Brazilian business daily O Valor.

Ascent intends to take advantage of the low cost of natural gas in the United States, due to the shale revolution, in an integrated plant of ethane and polyethylene. The area chosen for the project is in the area where the large reserves of the Marcellus and Utica shale are located. In this way, the company assures the proximity of suppliers of a low cost input, reducing logistical costs, explained David Peebles, director of institutional relations of the Ascent Project. The executive added that many clients of the company are near the area.

If the Ascent project goes forward, it is expected to become operational by the end of the decade. West Virginia's natural gas will be used at the proposed cracker plant in Wood County, Antero Resources announced recently. The company has signed an agreement to become an ethane supplier for the Ascent petrochemical complex in Washington, West Virginia.

As MRC wrote before, Brazilian petrochemical company Braskem is participating in the bidding to acquire the polyvinyl chloride (PVC) assets of Belgium's Solvay in South America. Solvay Indupa operates two industrial sites, one in Bahia Blanca, Argentina, and the other in Santo Andre, in Brazil's Sao Paulo state, that produce PVC plastic and caustic soda.

Braskem is Brazil's main producer of polyethylene and polypropylene. In addition with ongoing plants located in both petrochemical complexes, in April 2008 Braskem opened a 300,000 metric ton polypropylene plant in the city of Paulinia (Sao Paulo).
MRC

MOSCOW (MRC) -- Saudi Arabia’s Sahara Petrochemical, currently in talks with Sipchem over a possible merger, posted a 20.3% drop in first-quarter net profit, citing lower sales for the decline, said Gulfbase.

The firm made a profit of SR99.9 million in the opening three months of 2014, compared with SR125.4 million in the same period last year, according to a bourse filing. Sahara blamed the decline on lower sales, citing a planned shutdown of Al-Waha plant as well as lower income from associates.

Sahara and Saudi International Petrochemical Co. 2310.SE (Sipchem) announced plans in December to merge in the first half of 2014 through a share swap agreement.

Sahara Petrochemical earned net profit of SR578.7 million in 2013, registering a growth of 183% compared to net profit of SR204.4 million in 2012

SAHARA Petrochemicals performs participation and supervises foundation and establishing several limited liability companies in Al Jubail Industrial City with the participation of Saudi and foreign companies that have the modern skills and technologies; to produce and market its chemical and petrochemical products such as propylene, polypropylene, ethylene and polyethylene.
MRC

MOSCOW (MRC) -- Reliance Industries (RIL) will invest up to USD700 mln in its shale gas venture in the current fiscal and also ramp up spends under the USD13 bln capex programme in the petrochemical and refining business, reported Plastemart with reference to PTI.

"We will invest USD 600-700 million in the shale gas venture. This figure has almost become into a yearly run rate now...We hope to open around 125 to 175 new wells during the year," RIL Chief Financial Officer Alok Agarwal said.

As MRC informed previously, RIL had announced that it would invest over Rs 100,000 crore in expansion of its petrochemical capacities and adding value to its refining business. Besides, in October 2012, the company unveiled its plans to expand capacity at its refineries in the western state of Gujarat.

Reliance is also building one of the world’s largest ethylene crackers taking advantage of refinery integration at Jamnagar. This project will be commissioned in H2-2016 and would nearly double the ethylene capacity to 3.3 mln tpa.

Reliance Industries is one of the world's largest producers of polymers. The company's polymer production in 2010-11 (polypropylene, polyethylene and polyvinyl chloride) made 4,094 kilo tonnes.
MRC