July 12, 2024
Business Companies

Enka Full-Year 2023 Profits Dip 18.6% Year-on-Year

Medellin-based textiles and plastics-recycling giant Enka announced March 14 that its full-year 2023 profits fell 18.6% year-on-year, to COP$20 billion (US$5.14 million), mainly due to “higher financial costs.”

Earnings before interest, taxes, depreciation and amortization also fell 14% year-on-year, to COP$46.8 billion (US$12 million), while revenues dipped 4.6%, to COP$559 billion (US$143.6 million), according to the company.

The dip in corporate revenues resulted in part from a temporary halt in production of virgin PET (polyethylene terephthalate), along with “lower international prices and a lower volume in our textile and industrial businesses, mitigated by higher sales in our ‘green businesses’ and a better exchange rate” between the Colombian Peso and the U.S. dollar, according to the company.

While EBITDA declined year-on-year, nevertheless it topped levels “higher than those achieved in the years before the pandemic,” according to Enka.

During 2023, EBITDA benefitted from “higher sales of EKO-PET [recycled plastic] and the exchange rate, which mitigated inventory overruns, cost increases due to inflation, and the lower results of the textile and industrial businesses affected by the greater Asian presence at low prices in our markets,” the company explained.

Among the positive results in 2023, Enka cited:

  1. Start-up of new “Bottle-to-Bottle PET recycling plant,” enabling a 95% jump in “EKO-PET” sales.
  2. A 10-year agreement with Colombian soft-drinks giant Postobón for the supply of “EKO-PET” resin, “which strengthens the commitment of both companies to recycling and the circular economy.”
  3. A better net-debt ratio, closing at 1.0-times EBITDA.

During 2023, Colombian market sales represented 59% of Enka total sales, at COP$329 billion (US$84.6 million), up from 56% of sales in 2022.

As for international sales, these accounted for 41% of the total in 2023, versus 44% in 2023. Total international revenues hit US$52.6 million, “where growth stands-out by 112% in the European market.” As a result, Europe is now Enka’s third-biggest international market, “surpassed only by North America and Brazil,” according to the company.

In its other “green” recycled-plastics businesses, “sales of ‘EKO-Polyolefins’ grew by 18% due to the greater generation of the new PET bottle-to-bottle recycling plant and the signing of a three-year supply contract with Dow,” according to Enka.

On the other hand, “sales of ‘EKO-Fibras’ decreased 3% due to lower demand both in Colombia and in Brazil,” the company added.

Enka now has the capacity to transform more than 6-million plastic bottles per-day into recycled products. During 2023, “69% of our products were manufactured from recycled raw materials,” the company added.

As for its textile and industrial businesses, “the slowdown in the global economy affected the markets of the company’s textile and industrial businesses, ranging from tire producers in the region to the fashion textile sector, generating an imbalance between supply and demand due to large Asian capacities currently available and lower costs due to vertical integration and economies of scale,” according to Enka.

“Even under this scenario, in the industrial threads line we managed to grow sales 5% in volume . . . mainly in North America, with greater exports of technical threads, especially to Europe,” according to the company.

As for a problematic situation in the Colombian domestic clothing market, “the increase in clothing tariffs to 40% has caused a greater increase in smuggling and informality, as well as an increase in imports of filaments and fabrics, the first links in the textile and fashion chain,” Enka noted.

To respond to this challenge, “at Enka we will concentrate on looking for alternatives, focused on the future sustainability of the company,” the company added.

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