September 23, 2023

Enka 1H 2022 Net Income Drops 31% Year-on-Year

Medellin-based textiles and plastics/polyester recycling specialist Enka announced August 12 that its first-half (1H) 2022 net income fell 31% year-on-year, to COP$20.3 billion (US$4.87 million).

The company blamed the decline on “lower operating income, foreign exchange differences and an increase in financial expenses as a result of increased indebtedness.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) for 1H 2022 dropped 12% year-on-year, to COP$33 billion (US$7.9 million), despite a 28% percent increase in operating income, hitting COP$310 billion (US$74 million).

Despite the declines, Enka stated that it is “maintaining adequate profit margins and low financial debt.”

“The investments made in the project for the new EKO-PET [plastic bottle recycling] plant amount to COP$84 billion [US$20 million], about 75% of total investment, advancing on schedule and estimated budgets.

“The new single-use plastics law [in Colombia] increases the collection goals for bottles of PET and promotes the use of EKO-PET resins in beverage containers, which further commits to the development of the circular economy in the country,” Enka added.

As for profits challenges this year, “as expected, Asia has managed to reduce its logistics costs and recover its presence in western markets. This contrasts with the strong impacts of the conflict in Ukraine over Europe, affecting production costs and the supply risk of our nylon chain.

“To mitigate this situation, the company decided to increase temporarily our inventories to ensure new supply, and develop Asian suppliers to diversify supply reliability and competitiveness,” according to Enka.

Operating income for 1H 2022 grew 29% year-on-year, to COP$310 billion (US$74 million), “as a result of the increase in international prices and a higher exchange rate, which compensates for a 2.7% decrease in the volume of sales of structural businesses and lower sales of virgin PET, whose production ended in the second quarter of 2022,” according to the company.

During 1H 2022, exports grew 30% year-on-year, to US$35 million, accounting for 45% of total income, “due mainly to the strong increase in international prices. The good performance of demand in Brazil has allowed us to increase our share of sales there to 19%,” according to Enka.

For Enka’s “green” recycled product lines, revenues rose 43% year-on-year, “mainly due to higher international prices that offset a 4% reduction in sales volume,” according to Enka.

“EKO-PET” sales (8,187 tons) decreased by 5% in tons, “mainly due to a lower conversion factor due to lower quality of some bottles and some maintenance during the period.”

“EKO-Fibras” (4,941 tons) decreased 4% “mainly in marketing, due to wholesale Asian competition. Exports of fibers produced for geotextiles offset lower local demand.”

“EKO-Polyolefins” (932 tons) increased by 14% “due to greater demand in the local market for various applications. Dow initiated orders for ‘Revoloop’ resin manufactured by Enka, with expectations of incremental sales during the second semester.”

Textile and Industrial Businesses

Excluding production of virgin PET, textile/industrial sales totaled COP$201 billion (US$48 million), up 32%, “as a result of higher international prices and the devaluation of the exchange rate, which offset a 6% decrease in volume,” according to Enka.

“Textile share of total sales ends at 65% and exports accounted for 62% of sales of the line. Virgin PET sales represented 4% of total sales. Industrial Yarns (6,541 tons) sales remain at levels similar to 2021. Major canvas sales displace some sales of Technical Yarn due to greater added value.”

Textile Filaments (3,931 tons) saw sales dip 3% “due to lower sales of nylon by Asian competition, partially offset by polyester filaments for the export market,” the company added.

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