In This Article:
Release Date: November 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Indorama Ventures PCL (FRA:I93) achieved an adjusted EBITDA of $427 million in Q3 2024, marking a 15% increase quarter-on-quarter and a 32% increase year-on-year.
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The company has made substantial progress on its asset rationalization program, resulting in fixed cost savings of $19 million this quarter, with expectations to reach $170 million annually by 2025.
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Indorama Ventures PCL's diverse global business portfolio has demonstrated resilience, with stable PET and fiber volumes and a 10% year-on-year increase in Inven volumes.
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The company is advancing its digital transformation, with AI-driven solutions in procurement and manufacturing excellence programs showing positive results.
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Indorama Ventures PCL is preparing for IPOs of its Indovina and Indovina businesses, expected to raise a combined $1 billion, with significant progress already made in the reorganization phase.
Negative Points
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The company reported a $38 million inventory loss in Q3 2024 due to declining crude oil and paraxylene prices.
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Operating cash flow was lower in Q3 2024, impacted by net working capital outflows resulting from increased inventories and extended lead times from supply chain disruptions.
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The global economic environment remains uncertain, with potential impacts from inflationary pressures, geopolitical tensions, and supply chain disruptions.
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Indorama Ventures PCL's fiber segment is yet to implement asset rationalization actions, with expected savings of $40 million to flow in 2025.
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The company faces challenges in the intermediate chemicals segment, with a 14% year-on-year decline in adjusted EBITDA due to weaker MTBE spreads and higher feedstock costs.
Q & A Highlights
Q: Can you explain the impact of the $19 million fixed cost savings on net profit and the expected savings for 2025? A: The $19 million fixed cost savings equate to about 600 million baht. Without these savings, net profit would decrease by this amount. For 2025, we are targeting total fixed cost reductions of $160 to $170 million, with significant contributions from shutting down high-cost assets like Rotterdam and Canada. (Respondent: Unidentified_2)
Q: Could you clarify the divestment plans for non-core assets, particularly in the fiber segment? A: The divestment plans include profitable operations like the wool business, which is not core to our polyester focus. We aim to complete these divestments by 2025, targeting proceeds of around $300 million. (Respondent: Unidentified_2)