Alpek maintains dividend in difficult conditions

Alpek S.A.B. de C.V., headquartered in San Pedro Garza García, Greater Monterrey, Mexico, is one of the largest PET and PTA producers in the Americas and is the sole producer of polypropylene and caprolactam in Mexico. The company’s two business segments are: Polyester (including PTA, PET, rPET and polyester fibres) and Plastics & Chemicals (PP, expandable styrenics, and other speciality and industrial chemicals).

Alpek’s Q1 2023 report demonstrated that challenging conditions continue in the industry, including the consequences of stockbuilding during the Covid period.

Total sales volumes were down five per cent in Q1 2023 compared with Q1 2022, from 1.216 million tonnes to 1.161 this year. Plastics and chemicals were down quite heavily, by 13% year-on-year (0.254 million t to 0.222), although this segment has shown a recovery between Q4 2022 and Q1 2023 of two per cent, from 0.217 m t.

Production volumes were are higher than sales. Q1 2023 production was 1.381 m t (down nine per cent from Q1 2022 and 11% from Q4). Polyester was down eight per cent year-on-year (1.172 m t Q1 2023 from 1.277 m t 2022) and 12% since Q4.

Polyester revenues were the stronger of the two segments. Total year on year receipts declined 12%, from US$2332 million to US$2062m, but Polyester was down only two per cent, from US$1521m to US$1490. Q4 2022 showed an increase over the first 3 months of last year to Q1 2023 (US$1630) but that was not maintained into Q1 2023. Plastics and chemicals fell more heavily, by 30% year on year and two per cent quarter to quarter.

Margins and EBITDA have also been affected but the Board declared a dividend of US$159 million. The company has reviewed its capital expenditure strategy and will be delaying some projects, while the current situation stabilises and consolidates. PET resin operations at Alpek’s Cooper River site near Charleston, South Carolina, have been shut down indefinitely.

CEO Jorge Young reported that oil prices have stabilised at an average US$81/bbl Brent Crude, down on Q4 2023. PP prices have increased in the USA, despite a disconnect in prices between the Americas and the Far East, with some recovery towards historical levels.

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