2Q24 Performance Summary
- Sales Volume rose 3% QoQ and 1% YoY to 3.64MT
- Adjusted EBITDA of $370M, a rise of 1% QoQ and a decline of 11% YoY
- Operating cash flows of $494M, a rise of 168% QoQ and -1% YoY
- Net Operating Debt to Adjusted EBITDA of 3.97x
- Reported EPS of THB -4.13 and Adjusted EPS of THB 0.18
Indorama Ventures Public Company Limited (IVL), a global sustainable chemical producer, reported a slight rise in quarterly performance, supported by a gradual recovery in sales volumes and as management executes the company’s IVL 2.0 strategy to optimize its manufacturing model, reduce costs, and enhance competitiveness.
Indorama Ventures’ reported Adjusted EBITDA of $370 million in 2Q24, a 1% rise QoQ and a decline of 11% YoY. The company’s sales volumes increased 1% YoY due to subdued economic activity, but also signaling the end of a prolonged period of destocking that began in late 2022. Operating rates for the group increased from 74% to 76% in 1H24, although still at lower-than-average levels, signifying the weak global economic conditions. On a proforma basis, considering asset optimization actions, operating rates increase to 81%.
The Indovinya segment posted a robust performance on improved margins and rebounding demand for its high‑value-add downstream products. The packaging business, newly renamed ‘Indovida’, also performed well due to its leading footprint in emerging markets.
Looking ahead, Indorama Ventures is encouraged by the gradual improvement in the operating environment as customer inventory levels normalize, which is expected to spur further growth in volumes across all segments in 2H24. The company also expects to benefit in 2H24 from its shale gas advantage in the U.S, reflected in ethylene crack margins, positively impacting its integrated MEG business. Continued higher import prices in Western markets will enhance the company’s competitiveness as a leading local operator.
While the polyester industry manages the downcycle, Indorama Ventures’ experienced management team is working hard to deleverage and optimize the business under the company’s IVL 2.0 strategy to emerge stronger and drive enhanced earnings quality in an era of higher interest rates and a substantially changed industry landscape. As flagged at its Capital Markets Day on 6 March this year and reaffirmed in its Mid‑year strategic update on 24 July, the company is making substantial progress with IVL 2.0. In 2Q24, it recorded an impairment and expense provision of $666 million ($543 million is non‑cash) under its asset optimization program to improve manufacturing efficiency and reduce fixed costs. The cost benefits will start from 3Q24 and amount to about $170 million in savings in 2025. The company expects that the remaining asset optimizations will not have material impairments.
Management is continuing its intense focus on managing costs and extracting efficiencies, including its Olympus 2.0 program. These efforts achieved $47 million in savings in 1H24 ($29 million in 2Q24). The company is continually optimizing its capital expenditure, with capex supporting investments in sustainability—such as recycling in India—and automation and digital technology, as well as ongoing projects.
A key part of Indorama Ventures’ transformation journey is the implementation of new digital and AI tools to drive operational excellence in key areas, including manufacturing, commercial, procurement, sales, supply chain, and finance excellence. A significant portion of operations now have the new SAP S/4HANA ERP platform as a digital core, while rollouts of other world-leading solutions are ongoing in a phased approach through to 2026.
Mr. Aloke Lohia, Group CEO of Indorama Ventures, said, “We remain cautiously optimistic as we see gradual improvements in our industry operating environment, albeit with significant challenges still working their way through the cycle. In the last six months we have made pivotal changes to our organization, including enhancing our leadership teams and empowering them to drive the significant initiatives under our IVL 2.0 strategy. The objectives of IVL 2.0 are clearly mandated and will not only help us manage the current downturn but also position Indorama Ventures for the new era of sustainable long-term growth ahead.”
Segment Performances
The Combined PET (CPET) with Intermediate Chemicals segment posted an Adjusted EBITDA of $234 million in 2Q24, a 6% decline QoQ and a 25% decrease YoY, due to a one-time upside impact from a campaign run of NDC campaign in 1Q24 and as reduced industry spreads weighed on the Integrated PET business. A cracker outage at Lake Charles in the U.S also resulted in a $17-18 million impact to EBITDA. The cracker is gradually up and running in 3Q24.
The Indovinya segment recorded a strong Adjusted EBITDA of $98 million, a 41% gain QoQ and 85% YoY on increased volumes as destocking eased, supported by demand for downstream chemical surfactants amid the U.S crops season.
The Fibers segment recorded Adjusted EBITDA of $39 million, a 2% rise QoQ and a 19% gain YoY amid improved sales strategies and a robust focus on cost management, even as volumes declined, particularly in the Lifestyle business.
