Indorama Ventures (IVL), one of the world's largest petrochemical producers, plans to invest US$1.89 billion (68 billion baht) over three years, noting a gradual recovery of the global petrochemical industry and asset optimisation should enable the company to return to its previous earnings peak by 2026.
Founder and chief executive Aloke Lohia said the focus of capital expenditure (capex) continues to be recycling and increasing capacity in circular and bio-based materials, including investing in major emerging markets such as India and Africa.
Under the capex plan, $660 million is allocated for this year, followed by another $660 million next year and $570 million in 2026.
"We are considering building four recycling plants in India with a joint venture partner," Mr Lohia told the Bangkok Post.
Under the IVL 2.0 strategy, the SET-listed company is optimising its global asset footprint, including taking action on underperforming, high-cost assets, with six such assets under review, he said.
The group aims to raise about $700 million from the listing of its US unit next year and another $300 million from spinning off and listing its Asian packaging unit within three years, said Mr Lohia.
"This year we are optimising our largest combined PET [polyethylene terephthalate] segment, which is core to Indorama Ventures' traditional business and is driven increasingly by rising demand for recycled PET," he said.
IVL, which has more than 140 factories in 35 countries, reported a record net loss of nearly 10.8 billion baht last year, falling from a net profit of 31 billion a year earlier, as revenue declined to 548 billion baht from 666 billion.
Mr Lohia attributed the loss to a non-cash impairment of $308 million for the company's US joint venture because of escalating project costs, delays and challenging market conditions.
However, widespread customer destocking throughout the chemical industry has come to an end and IVL's volumes started to grow in the first quarter of this year, continuing on to the second quarter, he said.
Most of IVL's products and geographies are experiencing volume growth as pipeline inventories have started to soften in the industry, said Mr Lohia.
The company anticipates growth in volume and an improvement in the quality of earnings this year, driven by an easing of destocking, management actions to improve cost structures, a focus on free cash flow generation, and enhanced quality of earnings.
"We project our operating rates will improve from 74% in 2023 to 89% in 2026, while the loss of volume that resulted from destocking in the last 18 months will recover during this period," he said.
"The far-reaching IVL 2.0 measures will contribute to a return to previous earnings peaks over the next three years, with some improvement expected in 2024."
The company expects to deleverage the business by $2.5 billion by 2026 compared with 2023, based on proceeds, said Mr Lohia.
He said more than 70% of IVL's portfolio serves essential consumer goods, linked to long-term trends such as population growth, rising living standards, urbanisation and sustainability.
These trends drive industry growth of 4-5% annually.
As an industry leader, IVL can invest in innovative new products that will serve market demand for decades to come, said Mr Lohia.
"An example is the increased demand for recycled PET, especially in Western markets, where we have built a substantial advantage in terms of our global recycling infrastructure and our ongoing investment in advanced recycling technology," he said.