Bangkok--22 May--Indorama Polymers
Indorama Polymers Plc (IRP), among the largest PET producers in the world, today said that it expects its earnings for the year to remain strong while expects its spreads to remain at par with those seen during the first quarter of the year.
“For the year we expect our revenues to rise to about 45-47 billion baht while our expectations are that spreads (so far) during the second quarter have remained at par with those seen in the first quarter of the year,” Dilip Kumar Agarwal, the chief executive officer of IRP said during the analysts/press briefing at the Stock Exchange of Thailand.
IRP, he said, has so far been running at a very high capacity utilization and the volume of products sold would unlikely be below those seen during the first quarter as well.
“We are basically running at full capacity and there is not much higher we can get in terms of our sales volume until the new production facilities in the United States starts,” he added.
IRP during the first quarter reported a record breaking profit of 681 million baht a rise of 197.4% year-on-year for the its operations during the first quarter of 2009 thanks to the record volume sales coupled with the decline in production cost.
IRP during the first quarter reported a spread of $232 per ton against $208 per ton seen during the first quarter of 2008. The company that has operations spread across the continents of Asia, Europe and America, said that its current capacity was about 250,000 tons per quarter or about 1.1 million tons per annum. Last year the firm sold 770,000 tons.
“During this quarter so far, the picture looks good and I can firmly say that for our industry the worst is over,” he added.
He said that the company’s strength is now more than ever visible to its clients and with so many closures happening across the globe many major companies are turning to IRP to provide for their sourcing.
“Our order books are flooded and we have started to decline new orders by new customers,” he said while saying that as much as 1.62 million tons of capacity has been closed down across the globe and more than 1.75 million tons of capacity that was in the pipeline has been postponed.
He added that currently the United States based plant for IRP is already witnessing a 110% capacity utilization and the firm has had to import products from Asia to sell into United States.
His estimate is that the market for PET is likely to continue to show growth despite any recessionary fear as it is in the business of serving the basic needs of the consumer where the fast moving consumer goods companies such as Coke, Pepsi, Nestle and others are all witnessing a rise in sales volume. IRP counts these companies as some of its clients.
Mr. Agarwal said that the firm was on the prowl for possible acquisition that maybe available from the continued rationalization in the polymer businesses although any such acquisition would have to be based on many factors among the key being that it should be strategically fit to IRP’s businesses and its valuations should not be over board. He added that there was no discussions right now but the company was ‘always approached’ by sellers looking to sell their operations.
IRP he said was also set to benefit from the lower crude prices in various ways while stressed that even if the crude prices continue to rise the likely impact on the firm would be very limited. The possible decrease in prices of paraxylene and MEG, 2 major ingredients for PET bottles would help keep the cost of raw materials lower into the year.
IRP he said was also looking at investing some funds into a recycling plant in order to care for the environment and the plan is expected to start soon.
In Thailand, IRP, he said, was glad that Sermsuk Plc decided to expand its operations. Sermsuk, the local bottler of Pepsi, this week announced that it was investing 1.15 billion baht in expanding its bottling plant for PET bottles.
“Sermsuk buys 100% of its raw material for its bottles from us and this is good news for us,” Mr. Agarwal said adding that to meet the demand for Sermsuk’s expanded plant IRP has decided to hike its production of preform by 3,000 tons per annum.
About Indorama Group - IRP is a subsidiary of Indorama Ventures Limited, one of the largest vertically integrated polyester chain producers globally. Headquartered in Bangkok, the company operates 14 manufacturing units in 5 countries which span 3 continents. The company employs roughly 3,600 people, and is expected to generate revenues of $2.5 billion in 2009.