LONDON,April 30 --Tessenderlo's first quarter earnings were dragged down by weak performance in the chlor-alkali chain, the Belgian company said on Friday.
Revenue for the PVC (polyvinyl chloride)/chlor-alkali segment decreased by 5.9% from the same period in 2009 to ?18.2m ($155.53) from ?25.7m.
The segment's disappointing first-quarter figure was boosted by the inclusion of roughly half of the company s overall ?.5m in sales of surplus CO2 emissions during the period a one-off profit the company said would not contribute for the rest of the year.
Tessenderlo Chief Financial Officer Mel de Vogue said the company don t see any trend which would express optimism for the segment s improved performance throughout the rest of the year.
In an average year, de Vogue said recurring earnings before interest, tax, depreciation and amortisation (REBITDA) for the segment were ?5-40m. In the first quarter of 2010, they were ?.1m down from ?.5m in 2009.
We remain very cautious on PVC/chlor-alkali altogether, de Vogue said. But this is clearly one of the most problematic segments of the company right now.
Overall, the company narrowed its first-quarter net loss to ?.1m ($6.7m), from ?.2m in the 2009 period. De Vogue said he expected profits to grow further in the second quarter, but the chlor-alkali segment was not expected to fare any better.
Globally, prices for chemicals in the chain including caustic soda, chlorine and a variety of chlorinated solvents had been lacklustre since the beginning of the year.
Prices for PVC, the plastic used in piping and construction, have also been subpar, and producers efforts to boost them have thus far not succeeded despite a stream of maintenance outages and the fact that the second quarter is typically the strongest demand season.
However, extremely low 2009 prices increased the comparative PVC profit from 2009 further highlighting the tough year ahead in 2010 for the rest of the chlor-alkali chain.
Net contract prices for European PVC are currently ?75-885/tonne FD (free delivered) NWE (northwest Europe), according to data from global chemical market intelligence service ICIS pricing; on 1 May 2009, net prices were ?90-620/tonne FD.
As of 23 April, prices for liquid caustic soda were $200-225/DMT (dry metric tonne) FOB (free on board). In April 2009, prices were $380-400/DMT FOB.
De Vogue also said the company s profits were severely impacted by the unusually long and cold winter, and were also dragged down by high inventories that limited sales profits. Overall, he said, the company did not see any benefit from the type of buyer restocking that had bolstered sales and lowered inventories for other chemicals.
We are cautious. We may be too cautious, de Vogue said of the PVC/chlor-alkali profitability. But for the moment, we don t expect any improvement in quarter two from quarter one. We remain very prudent for the rest of the year.
Revenue for the PVC (polyvinyl chloride)/chlor-alkali segment decreased by 5.9% from the same period in 2009 to ?18.2m ($155.53) from ?25.7m.
The segment's disappointing first-quarter figure was boosted by the inclusion of roughly half of the company s overall ?.5m in sales of surplus CO2 emissions during the period a one-off profit the company said would not contribute for the rest of the year.
Tessenderlo Chief Financial Officer Mel de Vogue said the company don t see any trend which would express optimism for the segment s improved performance throughout the rest of the year.
In an average year, de Vogue said recurring earnings before interest, tax, depreciation and amortisation (REBITDA) for the segment were ?5-40m. In the first quarter of 2010, they were ?.1m down from ?.5m in 2009.
We remain very cautious on PVC/chlor-alkali altogether, de Vogue said. But this is clearly one of the most problematic segments of the company right now.
Overall, the company narrowed its first-quarter net loss to ?.1m ($6.7m), from ?.2m in the 2009 period. De Vogue said he expected profits to grow further in the second quarter, but the chlor-alkali segment was not expected to fare any better.
Globally, prices for chemicals in the chain including caustic soda, chlorine and a variety of chlorinated solvents had been lacklustre since the beginning of the year.
Prices for PVC, the plastic used in piping and construction, have also been subpar, and producers efforts to boost them have thus far not succeeded despite a stream of maintenance outages and the fact that the second quarter is typically the strongest demand season.
However, extremely low 2009 prices increased the comparative PVC profit from 2009 further highlighting the tough year ahead in 2010 for the rest of the chlor-alkali chain.
Net contract prices for European PVC are currently ?75-885/tonne FD (free delivered) NWE (northwest Europe), according to data from global chemical market intelligence service ICIS pricing; on 1 May 2009, net prices were ?90-620/tonne FD.
As of 23 April, prices for liquid caustic soda were $200-225/DMT (dry metric tonne) FOB (free on board). In April 2009, prices were $380-400/DMT FOB.
De Vogue also said the company s profits were severely impacted by the unusually long and cold winter, and were also dragged down by high inventories that limited sales profits. Overall, he said, the company did not see any benefit from the type of buyer restocking that had bolstered sales and lowered inventories for other chemicals.
We are cautious. We may be too cautious, de Vogue said of the PVC/chlor-alkali profitability. But for the moment, we don t expect any improvement in quarter two from quarter one. We remain very prudent for the rest of the year.
