Indorama Ventures Plc (IVL), a global sustainable chemical producer, reported adjusted earnings before interest, taxes, depreciation and amortisation of US$366 million in the first quarter of this year, a 32% increase from the previous quarter and a 2% decline year-on-year.
Sales volume grew 3% from the previous quarter as the widespread customer destocking that sapped demand throughout 2023 showed signs of a gradual recovery across all sectors, partially offset by a winter freeze in the US. The result was supported by lower utilities costs in Europe, Red Sea-related supply chain disruptions that benefited the company's import parity advantages, and favourable shale gas economics that bolstered profitability in the US.
IVL expects the recovery in volumes to continue through 2024, albeit at a gradual pace as destocking normalises and the approaching summer supports demand.
However, the overall landscape for the global chemical industry remains challenging due to excess capacity builds as well as persistent inflation and high interest rates which weigh on industry spreads and continue to impair profitability across the polyester value chain.
Aloke Lohia, group chief executive of Indorama Ventures, said the first quarter performance this year marked a new era as the company saw a modest recovery in demand and embarked on its IVL 2.0 plan with renewed vigour as a significant pivot in the company's business strategy.
As part of the group's 2.0 strategy, the company is optimising seven sites, including the ongoing evaluation of its PTA/PET operation in the Netherlands. It has also made significant progress in its programme to refinance $1.1 billion of debt within the first half of 2024 to ensure ample liquidity.
Recent capital raising included a $255 million "Ninja" loan, a 10-billion-baht debenture, a $100 million bilateral loan, and the recent successful close of a $500 million syndicated loan -- achieved at lower-than-average spreads compared to previous issuances.
To unlock value, Indorama Ventures is preparing its packaging and surfactants businesses for initial public offerings.
Mr Lohia said the company's management remains intensely focused on managing costs, optimising competitiveness, and maintaining high liquidity.
IVL's diverse geographical footprint is a key advantage in the current low-margin environment, allowing its businesses to maintain their strong market premium, supported by protection from trade and non-trade barriers.