Enka 2Q 2024 Net Income Crashes 96% Year-on-Year

Medellin-based textiles and plastics recycling giant Enka announced August 6 that its second quarter (2Q) 2024 net income plummeted 96% year-on-year, to COP$5.36 billion (US$1.3 million), from COP$10.5 billion (US$2.5 million) in 2Q 2023.

Earnings before interest, taxes, depreciation and amortization (EBITDA) also fell 36% year-on-year, to COP$9.296 billion (US$2.2 million), from $12.65 billion (US$3 million) in 2Q 2023.

As for first half (1H) 2024 results (January through June), net income fell 69% year-on-year, to COP$8.9 billion (US$2.1 million), down from COP$15 billion (US$3.6 million) in 1H 2023.

EBITDA for 1H 2024 likewise fell 12% year-on-year, to COP$19.4 billion (US$4.7 million), while revenues fell 23% year-on-year, to COP$34 billion (US$8.2 million), according to the company.

Despite the profits decline, Enka stated that “in the midst of a complex and challenging scenario, the company achieved positive results . . .with a debt reduction of more than COP$100 billion [US$24 million] compared to June 2023, and the net-debt ratio is zero-times-EBITDA.”

In addition, “consolidation of the new [plastics recycling] bottle-to-bottle plant allowed our green businesses to exceed 50% of total sales,” Enka boasted.

On the other hand, “our markets in 2024 have not been exempt from the inertia brought by the lower dynamics of the world economy,” according to the company.

“Low demand has generated an imbalance due to an excess supply of products from China and India at low prices, which take advantage of raw materials from Russia at a discount, seeking to fill their operational capacities.”

Factors influencing 1H 2024 results included “revaluation of the Peso against the dollar (15%) and the lower volume of the textile and industrial businesses (-25%) due to the greater supply of Asian products at low prices,” according to Enka.

Those declines were partially offset by “higher sales of the green businesses (+27%), driven by the new bottle-to-bottle recycling plant and the higher exports of ´EKOFibras,´” according to the company.

EBITDA margin for 1H 2024 improved to 8.0%, from 7.6% in 2023, “due to the focus on higher value-added products and strict control of administrative and sales expenses, which decreased by 11.8%, despite an increase in the CPI of 9.28% and the minimum wage increase of 12.07% in Colombia,” according to Enka.

On the other hand, “during the first half of 2024, exports reached US$21.3 million, 28% lower than the previous year,” the company added.

As for its plastics recycling “green businesses,” Enka reported a 27% growth in sales volume. “Exports represented 11% of the total line (US$3.7 million) due to the fact that Brazil is experiencing a recovery in industrial sectors, especially in geotextiles, allowing sales of ´EKOFibers´ to grow,” according to the company.

“With the consolidation of the new [plastics recycling] plant, we have reached, together with our clients, an important milestone, allowing us to meet the goals established by REP1 [Colombian producer recycling standards] and prepare for the new requirements defined by the Single-Use Plastics Law, which began on January 1, 2025,” the company added.