Enka 3Q 2023 Net Income Improves Year-on-Year

Medellin-based textiles and waste-plastics recycling specialist Enka announced November 14 that its third quarter (3Q) net income rose to COP$3.18 billion (US$804,000), up from a COP$2 billion (US$506,000) net loss in 3Q 2022.

Earnings before interest, taxes, depreciation and amortization (EBITDA) dipped slightly year-on-year, to COP$10.28 billion (US$2.6 million) in 3Q 2023 versus COP$11.45 billion (US$2.9 million) in 3Q 2022.

As for nine-months (January through September) 2023, sales so far this year have dipped 10% year-on-year, to COP$418 billion (US$105 million), while nine-months 2023 EBITDA has fallen 37% year-on-year, to COP$32 billion (US$8 million), according to the company.

The decline in revenues this year is “mainly due to lower international prices, lower demand from the textile and industrial businesses and the end of temporary production of virgin PET (Alpek), which were partially offset by higher sales from ‘green’ businesses, mainly from the new ‘Eko-PET’ plant,” according to Enka.

As for nine-months 2023 net income, that was virtually unchanged year-on-year, at COP$18.3 billion (US$4.6 million), according to the company.

Among the highlights so far this year:

• Enka’s sales from the new “Eko-PET” recycling plant are up 65%. “The increase in sales of Eko-PET has compensated for lower results in traditional businesses due to high raw material costs, decreased demand and adjustment in margins due to the greater presence of Asian competition in our markets,” according to the company.

• Total assets ended in September 2023 at COP$740.6 billion (US$186 million), down COP$67 billion (US$16.8 million) year-on-year, “mainly in working capital (-COP$54 billion/US$13.6 million) due to normalization in inventory rotations of the textile and industrial businesses, lower international prices and a decrease in raw material inventory by the entry into production of the new B2B [business-to-business] plant mainly,” according to Enka

• Liabilities decreased by COP$94.6 billion (US$23.8 million), to COP$232 billion (US$58 million), “mainly due to a reduction in financial debt (-COP$57 billion/US$14 million), lower leverage in suppliers (-COP$27,967 million) and lower valuation of derivative instruments due to revaluation of the Colombian peso,” according to the company.

As for its market situation so far this year, “the share of exports is 45% (44% in 2022), increasing by 14% in volume and registering a reduction in income of 7% due to lower international prices, exports reaching US$42.2 million,” according to Enka.

“Exports of ‘Eko-PET’ to North America stand out as a result of the successful product approval processes. Likewise, diversification has allowed us to mitigate the lower demand for industrial threads and ‘Eko-Fibers’ in North America and Brazil, through a greater presence in Europe with technical threads for different applications in which aquaculture and safety ropes for activities or work at heights stand out,” the company added.

As for “green” recycled-products businesses, “consolidation of the approval processes of the new B2B plant has allowed an increase in sales volume by 31%. Revenues hit COP$169.4 billion [US$42.6 million], accounting for a 41% share of the company’s total revenues, up from 33% at year-end 2022,” according to the company.

However, while “Eko-PET” sales are up 65%, “Eko-Fibras” volume fell 22%, “both in the local market (-29%) and in exports (-10%), due to a decrease in demand accompanied by imports from Asia at low prices. On the other hand, exports to Brazil decreased due to the low dynamics of the construction sector that affects sales of fibers for geotextiles,” according to the company.

On the other hand, “Eko-Polyolefins” sales volume rose 20%, in developing markets with greater added value.

As for its textile and industrial businesses, sales revenues dipped 15% “due to a decrease in demand and low international prices and in exports (-11%), mirroring lower international prices,” according to the company.

Textile filaments sales volume fell 19% “due to low dynamics in the textile/clothing sector in Colombia and Brazil, along with low international prices and exchange restrictions in Argentina that affect shipments to that destination,” the company added.

As for its growing production from the new “Eko-PET” plant, this operation “will continue to show positive results and will continue to leverage the growth of the company and its customers. committed to sustainability and the circular economy,” according to Enka.

“Next year will be decisive for the PET containers and packaging sector, because in 2025 standards will come into force requiring recycled resin content (such as Eko-PET) in containers and packaging to be able to go on the market. especially in Colombia, some states of the United States and the European Union,” the company added.