MOSCOW (MRC) -- Unipar’s sales and earnings plunged in the first quarter because of lower margins as selling prices for most of its products fell, the Brazilian chemicals producer said.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at Brazilian reais (R) 490m (USD98.6m), down nearly 41% year on year. Quarter on quarter, however, Unipar posted improved financial metrics.
Unipar produces chlorine, caustic soda, and derivatives such polyvinyl chloride (PVC), vinyl chloride monomer (VCM), ethylene dichloride (EDC) or hydrochloric acid, among others.
Unipar said the average utilisation rate at its three plants of Cubatao and Santo Andre, in Brazil, and Bahia Blanca, in Argentina, stood in the first quarter at 83.3%, down from 87.7% in the first quarter of 2022.
Quarter on quarter, however, the utilisation rate improved from the fourth quarter’s 80% in the fourth quarter. “The main highlight being the Santo Andre plant, which recorded an average capacity utilisation of 88% in the quarter, with a sharp increase compared to Q4 due to customer demand/inventory replenishment and the scheduled shutdown in October 2022,” said Unipar.
Despite the sequential improvement from the fourth quarter, Unipar adopted the same downbeat tone about the economic outlook it had already displayed in March, when it published its Q4 results.
The company cited a report by Abiclor, the Brazilian trade group for the chlor-alkali and derivatives sector, showing production of chlorine in January and February in the country had fallen by 4.3%, compared with the same two-month period of 2022.
We remind, Unipar’s earnings and net income fell sharply in 2022 despite an increase in sales on the back of higher costs for feedstocks. The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA), the best metric to measure a company’s financial soundness, fell by nearly 16% to Brazilian reais (R) 3.16bn (USD605m). In the fourth quarter of 2022 alone, EBITDA fell by more than 56%, year on year.
Unipar produces polyvinyl chloride (PVC), caustic soda, vinyl chloride monomer (VCM), ethylene dichloride (EDC) and other chlorine derivatives, among others; its three main production facilities are in Cubatao and Santo Andre, Brazil, and Bahia Blanca in Argentina.