IVL reports one of the best quarterly profits in years, expects revenues to continue to remain vibrant

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Indorama Ventures Plc (IVL), one of the world’s leading makers of polyethylene terephthalate (PET), reported a record 1st quarter result on Thursday, surprising even best

IVL today reported a net profit of just over 6 billion baht for the 1st quarter of 2021 against a 570.7 million baht seen during the same period last year. The earnings per share (EPS) stood at 1.04 baht in Q1 2021 against 0.07 baht in Q1 2020.

The announcement of the results by IVL is one of the best quarterly results the company has posted in years. The result comes as the company is witnessing a surge in demand for its products and also an upcycle in the industry that has been depressed for the past few years.

Expectations are that IVL is likely to continue to show stellar results in the next few quarter with chief executive Aloke Lohia saying that the company will likely set a benchmark for growth in the coming year.

“(We) expect 2021 to set new benchmark for IVL with growth coming from fibers and integrated oxides and derivatives (IOD) segment,” Aloke had told shareholders during the presentation at the annual general shareholders meeting.

Sources in the company continue to insist that this quarter (Q2 2021) is likely to see similar if not better results.

“If you think this is good result, wait for the next quarter,” a source who declined to be named told Thai Enquirer.

The source added that it is not going to be just the 2nd quarter that would be better but probably the 3rd quarter as well.

Beating Analyst’s Estimates

IVL’s Q1 results beat the best estimates put by the analysts with Kiatnakin Phatra Securities giving one of the highest estimates of 2.8 billion baht for Q1 2021 (actual number is more than twice as much of net profit as this estimate).

Phatra’s Komsun Suksumrun had put his 2021 estimates for the EPS at a mere 2.51 baht a share, which he may have to revise after the 1st quarter alone reported more than 1 baht in EPS.

Even Komsun had in his note to clients on April 27th said that he expects the Q2 results to be far better than those of Q1 due to the fact that Q2 is usually the period when the PET demand is at its peak.

“Core Q2 2021 net profit after tax (NPAT) is likely to range between 4.5 billion baht and 5 billion baht based on the recent integrated PET spread traction in April,” he had said adding that Phatra’s NPAT forecast is above consensus estimate by 6 per cent for 2021 and 27 per cent for 2022.

IVL said that it has benefited from the fact that it has gone into high value added (HVA) business and commodity products. The HVA segment makes up about 40 per cent of IVL’s earnings before interest, tax, depreciation and amortization (EBITDA), which over the long term has provided premium margins and low variability.

The commodity segment represents about 60 per cent of IVL’s EBITDA, at a significant 2 alpha to benchmark margins set in China, due to IVL’s global integrated portfolio with market leadership in the West. IVL has about 1/3 of the market share in both Europe and United States for its PET business.

“Our advantaged portfolio across the three business segments, supported by our transformation programs, is expected to yield in our 2023 business plan superior ROCE in line with our target of about 15 per cent,” Aloke said in a statement to the Stock Exchange of Thailand.

The company has also benefited from its ‘Project Olympus’ a company wide cost and business optimization program. Project Olympus overdelivered on its targets by 21 per cent in 2020, IVL has made progress as planned in Q1 2021.

The program has yielded $67 million in Q1 2021, split evenly between business-led initiatives and cost transformations.

IVL’s core business are divided into 3 main segments namely


This segment saw benefit from higher freight rates which impacted the sales price in IVL’s  respective domestic markets. This translated into an overall fibers core EBITDA growth of 23 per cent quarter on quarter (QoQ) and 19 per cent year on year (YoY).

In the fiber business IVL achieved EBITDA of $85 million, due to inventory gains. This segment also saw $34 million in efficiency gains from Project Olympus during the quarter, with a focus on operational excellence initiatives.

Combined PET

This is a big chunk of IVLs business and it achieved core EBITDA of $260 million, growing by 47 per cent QoQ and 35 per cent YoY, driven primarily by demand growth and higher integrated industry spreads on top of the sharp rise in crude oil prices.

The segment achieved EBITDA of $379 million largely due to positive impact from adjustments in contracts and inventory. It also saw $17 million in efficiency gains from Project Olympus

Integrated Oxides and Derivatives (IOD)

IOD segment’s core EBITDA grew 191 per cent QoQ but declined 26 per cent YoY. IVL saw an  EBITDA of $19 million due to inventory gains netted off with extra-ordinary expenses incurred as a result of Polar Vortex. The IOD segment delivered $17 million in efficiency gains from Project Olympus.

Aloke in his note to the SET said that the company has also managed to lower the company’s debt burden by $148 million thanks to the improved performance of the company.

With a liquidity of around $2.2 billion in March 2021 and operating cash flow of $201 million in Q1 2021, IVL was well positioned and therefore during the quarter, net debt reduced by $148 million with improved performance.

“Our net operating debt to equity has improved to 1.17 times from 1.35 times a year ago.”

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