LG Chem Q4 net profit falls 38.2%

MOSCOW (MRC) -- LG Chem Ltd., South Korea's leading chemicals and battery maker, said Monday its net profit fell 38.2 percent in the fourth quarter from a year ago due to falling oil prices and sluggish global demand, said the company in its press release.

Net income came at 1.09 trillion won (USD1.01 billion) in the October-December period, compared with 1.77 billion won a year earlier, the company said in a regulatory filing.

Sales were down 4.8 percent to 5.37 trillion won on-year in the period, while operating profit fell 26.8 percent to 231.6 billion won. For all of 2014, operating profit declined 24.8 percent to 1.31 trillion won, and sales edged down 2.4 percent to 22.57 trillion, it said.

"Both sales and profit decreased last year due to weak demand in the wake of a slow recovery in the global economy and plunges in oil prices," Cho Suk-jeh, the chief financial officer of LG Chem, said in a briefing. Weak global demand and falling oil prices hurt operating profits in the petrochemical and mobile device material businesses, while energy solutions pared some of losses, the firm said.

Its earnings improved in mobile device materials thanks to the strong panel market and higher utilization rate of new Chinese lines, and sales of its automotive batteries improved with a recovery in major customers' shipments, it added.

LG Chem pledged to enhance profitability this year in the mobile battery business and expand its market share in China with the development of advanced batteries for electric vehicles.

"Although sales in the petrochemical business may decrease in the wake of cheap oil prices, the drop will be in a limited range, which would improve profits for this year," Cho said. "The company will invest 1.7 trillion won in 2015, up 13.3 percent from last year."

As MRC wrote before, LG Chem is in plans to shut its phenol-acetone plant for maintenance turnaround. The plant is likely to be shut in May 2015. It is likely to remain off-stream for around one month. Located at Daesan in South Korea, the plant has a phenol capacity of 300,000 mt/year and acetone capacity of 180,000 mt/year.

LG Chem Ltd., often referred to as LG Chemical, is the largest Korean chemical company and is headquartered in Seoul, South Korea. According to ICIS report, it is 15th biggest chemical company in the world in 2011. It has eight domestic factories and global network of 29 business locations in 15 countries. LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.
MRC

MOSCOW (MRC) -- Sika has entered into exclusive negotiations with Axson management and shareholders to acquire Axson Technologies, a leader in the field of epoxy and polyurethane polymer formulations for design, prototyping and tooling, structural adhesives, composite materials and encapsulation products for the automotive, nautical, renewable energy, sports & leisure and construction markets, said the producer in its press release.

The transaction is subject to conditions including anti-trust approvals in certain jurisdictions as well as consultations with employee representatives.

As MRC informed before, in October 2013 AkzoNobel finalized the EUR260 million divestment of its Building Adhesives business to Sika AG.

Sika is a specialty chemicals company with a leading position in the development and production of systems and products for bonding, sealing, damping, reinforcing and protecting in the building sector and the motor vehicle industry. Sika has subsidiaries in 90 countries around the world and manufactures in over 160 factories. Its more than 16,000 employees generated annual sales of CHF 5.6 billion in 2014.
MRC

MOSCOW (MRC) - Some European producers of polypropylene (PP) have cut their export PP prices further for CIS markets, despite the price drop of EUR90-100/tonne in the first half of January, according to ICIS-MRC Price Report.

European producers had to decrease export PP prices by EUR90-100/tonne in the early January under the pressure falling propylene contract prices. However, last week, some producers announced further reduction in export prices.

Price offers for homopolymer PP for the delivery in the CIS countries in early January were discussed in the range of EUR1,010-1,070/tonne FCA. In the late January some producers from Eastern Europe have reduced their PP price offers to the level of EUR900-950/tonne FCA.

However, market participants are in no hurry to make deals for the supply of polypropylene, expecting European PP prices to be cut further in February.

An ongoing weakening of the euro against the dollar contributed to the general downtrend in European PP prices. The exchange rate of the euro to the dollar on 26, January was at 1.12EUR=1USD.
MRC

MOSCOW (MRC) -- Last year's production of high density polyethylene (HDPE) in Russia decreased by 19%. Russian producers increased their capacity utilisation, but it did not help to offset a forced outage at Stavrolen, according to MRC ScanPlast.

December HDPE production in Russia fell to 72,200 tonnes versus 73,400 tonnes in November because of the reduced capacity utilisation at Kazanorgsintez. The overall HDPE production totalled 817,000 tonnes in 2014 versus 1.011 million tonnes a year earlier. The main reason for the fall was the long shutdown at Stavrolen (due to an accident), whereas other Russian producers increased their output.

The HDPE production structure by plants looks the following way over the stated period.

Kazanorgsintez, Russia's largest polyethylene (PE) producer, produced 43,600 tonnes in December compared to 46,900 tonnes in November. The plant's overall HDPE production rose by 5% in 2014 to 489,500 tonnes.

Nizhnekamskneftehim produced a little over 19,000 tonnes of PE last month, whereas in November, this figure was 18,600 tonnes. The plant's overall HDPE output exceeded 186,800 tonnes over the stated period, up by 15% year on year.

"Gazprom neftekhim Salavat" increased its HDPE production to 9,500 tonnes in December, despite a major products expansion, versus 7,800 tonnes a month earlier. Thus, the Bashkir plant raised its last year's HDPE output by 26% to 92,800 tonnes because of an increase in its capacity utilisation.

As reported earlier, Stavrolen was forced to shut down its PE production due to an accident at its ethylene unit on 26 February. The plant's HDPE production was about 48,000 tonnes in less than two months of 2014. According to the recent statements made by the company's officials, the resumption of HDPE production is expected in March - April 2015. The plant's annual production capacity is 300,000 tonnes.

MRC

MOSCOW (MRC) - Total imports of polyethylene (PE) in Belarus increased by 3.7% in eleven months of 2014.
The demand in the market of high density polyethylene (HDPE) has been weak, while the demand for other PE grades increased, as per MRC analysts.

According to the National Bureau of Statistics of Belarus, November imports of polyethylene in Belarus was 10,900 tonnes, compared with 11,000 tonnes in October. Total PE imports in the country grew to 101,300 tonnes in January - November 2014, compared with 97,700 tonnes year on year. Structure of PE imports in Belarus was as follows.

November imports of low density polyethylene (LDPE) and linear low density polyethylene (LLDPE), despite the seasonal factors, rose to 5,800 tonnes, compared with 5,400 tonnes in October. Total imports of these PE types in the country grew to 49,300 tonnes in January - November last year, compared with 41,400 tonnes year on year.
The main suppliers of PE in the local market were the producers from Saudi Arabia (30,300 tonnes) and Russia (6,800 tonnes).

November imports of HDPE in Belarus decreased to 5,200 tonnes, compared with 5,600 tonnes in October. Supply from Saudi Arabia decreased two times, while Russian producers, on the contrary, increased their presence in the local market to 1,600 tonnes (700 tonnes in October). Total HDPE imports in Belarus decreased to 52,000 tonnes, down 7.7.% year on year.
MRC