Petrochemicals - Mexico - Mexichem profits flat through September 2008, Q3 results down 63.2%

Mexican chemical and petrochemical firm Mexichem (BMV: MEXCHEM) reported profits of 1.42bn pesos (US$108mn) for the first nine months of this year, flat compared to the same period of 2007.

Consolidated sales for the first three quarters jumped 41% to 22.9bn pesos from 16.2bn year-on-year, the company said in a statement.

The improvement in sales was due to volumes being up 7.4% and prices by 22.1%, while acquisitions accounted for 9% of the increase, Mexichem director of investor relations, Enrique Ortega, confirmed to BNamericas.

Acquisitions included Plastubos (PVC pipes Brazil), Dripsa (agricultural solutions Argentina), Geosistemas de Perú (geotextiles), Río Verde (fluorite mine Mexico), Bidim (geotextiles Brazil) and Quimir (phosphates Mexico).

Results were boosted by significant growth in infrastructure, housing and agriculture in Latin America, mainly Brazil, Peru and Colombia, Mexichem said.

Ebitda in January-September amounted to 4.0bn pesos, 29% higher than the same period last year, due to better sales prices of caustic soda, phosphates, PVC and pipes, which compensated for the increased energy and raw material prices, the statement read.

VINYL-CHLORINE

Sales of vinyl-chlorine were 10.8bn pesos in January-September, 54.9% higher year-on-year, with Ebitda up 16.5% to 1.59bn pesos, as the company was able to maintain margins between sales prices and raw material costs.

The chain's main products are chlorine, caustic soda, sodium hypochlorite and PVC resins.

FLUORINE

Revenues from fluorine totaled 1.5bn pesos through September, down 3.5%, while Ebitda was 33.5% lower at 455mn pesos. Margins have declined because of raw material price hikes.

TRANSFORMED PRODUCTS

The company saw sales of transformed products of 12.8bn pesos in the first nine months of this year, jumping 45.2% year-on-year, while Ebitda summed 2.21bn pesos, a 71% increase. The chain bolstered the company's results this year, Mexichem said.

Included in the operating results by chain are inter-company sales, some of which are eliminated in the consolidated results, Ortega explained to BNamericas.

DEBT

Net debt at the end of September stood at 7.72bn pesos. Compared to the same time in 2007, Mexichem had reduced its debt by 937mn pesos, even after payment for the latest six acquisitions worth over 1.3bn pesos.

Of the total debt, 72% is dollar denominated and the remainder in local Latin American currencies, the company said.

THIRD QUARTER

Profits were 224mn pesos in the third quarter, down 63.2% from 609mn pesos in the same three-month period of 2007.

Sales for the quarter increased 18% to 8.34bn pesos from 7.08bn pesos year-on-year, the company said.

Ebitda was up 3% to 1.43bn pesos compared to 1.39bn pesos, the company reported.

Sales volumes were down 1.5% and average selling prices were 6.6% higher.

Final third quarter figures were in line with Mexichem's preliminary results released to the Mexico City bourse (BMV) over three weeks ago.

OUTLOOK

"This year's sales results in pesos, should the currency depreciation levels remain, will be above our original estimate of 30bn pesos, since our sales - roughly 70% - are dollar denominated," the statement read.

"Next year we could see sales grow 20%, it depends on the economic circumstances," Ortega said.

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