Enka Colombia 1Q 2018 Net Income Drops Year-on-Year, but Outlook Improves
Medellin-based synthetic textiles specialist Enka Colombia announced May 11 that its first quarter (1Q) 2018 net income fell to COP$1.7 billion (US$591,000), down from COP$4.2 billion (US$1.4 million) in 1Q 2017.
Operating income for 1Q 2019 rose 8.4% year-on-year, to COP$91.9 billion (US$32 million), but earnings before interest, taxes, depreciation and amortization (EBITDA) fell to COP$5 billion (US$1.7 million), down from COP$6.8 billion (US$2.3 million ) in 1Q 2017.
The Colombian domestic market accounted for 54% of 1Q 2018 sales, while Brazil took the number-two spot at 22%; the USA market was a distant third at 5% and Argentina fourth at 4%.
Volume (in tons) of sales dipped 2.5% year-on-year “mainly because of fewer sales of recycled products” as feedstocks.
The rising value of the Colombian peso versus the U.S. dollar during the latest quarter slightly mitigated the decline in EBITDA and net income, as a large portion of corporate sales are indexed to the U.S. dollar, Enka added.
Net debt at the end of 1Q 2018 was a relatively modest 1.9-times EBITDA, although not as good as the 1.6-times index in 1Q 2017, the company added.
Sales in the domestic market rose 5% (in Pesos) while export sales rose 12% year-on-year, led by technical thread exports to the U.S. and Canada, “EKOFibras” recycled fiber sales to Brazil and the development of filament textile sales to Argentina, according to Enka.
As a result, the export markets accounted for 46% of sales, up from 45% in 1Q 2017.
“Green” and recycled “EKOFibras” fiber sales grew 16% year-on-year, accounting for 33% of corporate sales, according to the company. Meanwhile, sales of “EKOPET” recycled textiles are at 100% of production capacity, with the company now focused upon boosting collection of waste-plastic bottle feedstocks.
Textile filament sales rose 12% year-on-year, mainly due to a 28% jump in export sales, while domestic sales were flat. However, a government measure aimed at thwarting contraband textile imports should help improve domestic sales in coming months, the company added.
The year 2018 is starting on a positive note thanks to restrictions on low-quality Chinese recycled product imports, the new Brazil free-trade agreement and a crackdown on contraband clothing, Enka added.
By third-quarter 2018, Enka expects to start-up a new plant that can reprocess waste plastic bottle-tops and labels into fibers. On a parallel front, Enka continues to work toward a second-quarter 2019 start-up of a modernized “EKOFibras” plant, which will boost productivity and quality of fibers produced from waste plastic bottles.
Proposed legislation in the Colombian Congress that would require plastic recycling also could boost prospects for Enka in future years, the company added.