Enka 1Q 2024 Profits Dip Year-on-Year
Medellin-based textiles and plastics-recycling giant Enka announced May 14 that its first quarter (1Q) 2024 net income fell 22% year-on-year, to COP$3.56 billion (US$929,000), from COP$4.6 billion (US$1.2 million) in 1Q 2023.
Revenues also fell 14% year-on-year, to COP$125 billion (US$32.6 million), but earnings before interest, taxes, depreciation and amortization (EBITDA) actually rose 11% year-on-year, to COP$10.1 billion (US$2.6 million), according to the company.
The boost in EBITDA came from “higher sales from the new [plastic recycling] bottle-to-bottle plant, mitigating the peso revaluation and lower volume of textile and industrial businesses,” according to Enka.
Net debt ratio improved to 0.3-times EBITDA “due to the reduction in net debt of COP$33 billion [US$8.6 million],” the company added.
“The company’s results in the first quarter 2024 come from mixed behavior in its markets. On the one hand, green [plastics recycling] businesses continue to show positive dynamics, due to the commitment of the main beverage brands to environmentally friendly products, such as ‘EKO-PET’ resin,” according to Enka.
“For its part, in the textile and industrial businesses, the beginning of 2024 maintains the low pace observed since the previous year, with markets affected by the lower demand of the world economy and Chinese producers putting excess capacities at low prices, taking advantage raw materials from Russia at a discount.
“Added to this was the revaluation of the Colombian peso [against the U.S. dollar], which lost around $837 pesos (-17.6%) compared to the same period of the previous year.
“As a result, net profit was COP$3.56 billion [US$929,000] at the end of March 2024, a positive result in the midst of a strong global situation, but lower than the previous year due to the lower performance of our subsidiary ‘Eko-Red,’ affected by the low international prices of virgin PET resin and the strong competition for recycled material due to bottle exports to Ecuador and the new capacities installed in Colombia,” the company added.
“The consolidation of the new ‘EKO-PET’ [plastics recycling] plant helps our clients meet their corporate sustainability goals and prepare for the regulatory challenges that will be in force in 2025.
“Meanwhile, ‘EKO-Fibras’ presented a higher sales volume, driven by the reactivation of industrial sectors, especially geotextiles in Brazil.
“Finally, ‘EKO-Poliolefinas’ maintains the dynamics at the end of the year, where sales were affected by lower demand and low prices for virgin resins.”
On the other hand, “factors such as Asian competition — largely from China and India — that has been gaining competitiveness due to the supply of raw materials from Russia at a discount and the large vertically integrated capacities, from raw materials to the final product, generate great pressure on business margins, added to the lower global dynamics” for its textile and industrial business divisions,” Enka explained.
As a result, textile and industrial business income plunged 41% year-on-year, “mainly due to lower demand (-24% volume), lower exchange rate and low international prices,” according to the company.
“The increase in international conflicts and their impact on the supply chain, uncertainty regarding the pace of interest rate reductions by central banks, as well as the imbalance between supply and demand, further increase uncertainty. facing the path of global economic recovery.
“In the midst of this challenging context, we will maintain our focus on the circular economy, strengthening the Eko-Red collection network, seeking to guarantee the required supply for recycling plants.
“In the textile and industrial businesses, we will continue to focus on niches of value-added products demanding high specifications and high quality levels, fundamental barriers that will differentiate the Enka product from Asian commodities,” the company added.
