Indorama Ventures Public Company (IVL), the world’s largest PET company, achieved total sales revenue of US $1.9 billion in the second quarter of 2013, an increase of 9% over the same period last year.

“We have been seeing signs that the trough period of the past two years is coming to an end and this is extremely encouraging,” commented Aloke Lohia, Group CEO of Indorama Ventures. “We are excited that IVL’s differentiation and low cost strategy is paying off since our 18% margin recovery over first quarter this year is much superior to a typical industry player.”

Enhanced margins

“Price volatility continues to be high which saw our feedstock – Paraxylene and MEG drop by 12% in second quarter this year over first quarter that led to a inventory loss of US$ 38 million. On the positive side we see the PTA business recovering moderately and our HVA and PET business margins improve significantly,” Lohia noted.

Margin gains in Asia experienced a remarkable rebound over the last 12 months as core EBITDA hit US $144 million, up from US $93 million in the first quarter of 2013. However, the figures are still 4% lower than the US $150 million achieved in the second quarter of 2012, mainly due to lower output at its flagship Glycols site in USA, which was undergoing a planned turnaround – a mandatory event that takes place every two to three years.

High performance

The company’s North American businesses continues to outperform other regions despite loss of contribution from its flagship Glycols business.

“Moderate cash profit of US $75 million was due to uncontrollable external factors, such as a sizeable inventory loss of US $38 million and a sharp US $8 million foreign exchange swing as the Thai Baht sharply depreciated, nevertheless our experience is that what matters is the health of our core operations, which remain solid,” Lohia explained.

“We anticipate continued improvements in our earnings as we leverage on our differentiation and low cost strategy to provide enhanced margins at the best total cost of delivery.”

Focus on growth

Management commitment to turning around its joint ventures over time bore fruit as German affiliate Trevira achieved its maiden net profit in the second quarter under IVL’s stewardship. The second half of 2013 is expected to see continued growth as operational excellence projects kick in and a new state-of-the-art Polyester fibre facility in Indonesia commences operation in the fourth quarter that will lower IVL’s costs significantly.

The company’s European business is currently undergoing brownfield expansion of PTA capacity in Rotterdam and debottlenecking of its PET plant in Poland that is expected to further improve the company’s cost competitiveness in Europe. “Our aim is to simultaneously deliver reduced total cost of sales to enhance cash flows while providing reputable, safe and reliable products to our customers,” Lohia stated.

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