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Enka Textile Factory in Girardota, Antioquia Enka Textile Factory in Girardota, Antioquia Source: Enka

Enka Posts COP$12.6 Billion Profit for 1Q 2021, Reversal from 1Q 2020 Net Loss

Published in Companies Written by  May 14 2021 font size decrease font size increase font size 0
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Medellin-based textile and plastics-recycling giant Enka Colombia reported May 13 a COP$$12.6 billion (US$3.4 million) net profit for first quarter (1Q) 2021, a big reversal from the COP$3 billion (US$814,000) net loss in 1Q 2020.

“The results of the first quarter of 2021 present the best result of recent periods, as a consequence of the good demand behavior in strategic businesses and the benefits of a higher exchange rate, whose effects had been limited in previous quarters by exchange hedges taken prior to the Covid-19 crisis,” according to Enka.

“So far this year, EBITDA [earnings before interest, taxes, depreciation and amortization] amounts to COP$17 billion [US$4.6 million], exceeding the 1Q 2020 result by about 50%,” the company added.

EBITDA margin during 1Q 2021 rose to “a historically high level, ending at 15% of sales, while the previous year it stood at 11%,” according to Enka.

“This behavior is explained by several factors:

“1. The impact of the stoppage of operations of a large part of Enka's production during the last week of March 2020;
“2. The benefits of a higher TRM [Colombian peso-exchange rate] on the company's income, a high percentage of which is indexed to the U.S. dollar.
“3. The strong increase in international prices, as a consequence of the rapid recovery of world demand and its pressure on the supply of transport services, which was a carryover to sale prices,” the company added.

Operating income grew 10.7% year-on-year, to COP$113.6 billion (US$30.8 million), “as a result of the increase in international prices and higher sales volume, mainly due to the reactivation of virgin PET [waste plastic] sales.”

“At the end of 2020 a raw material supply agreement was reached with Alpek to reactivate the sales of virgin PET, seeking to offer a local supply alternative to customers,” the company added.

Export Markets

Exports in 1Q 2021 came-in-at US$12.5 million, representing 43% of total sales.

“Market diversification continues to be essential to mitigate the effects of Covid-19 on some regions, highlighting the increase in the United States, Canada and Mexico (NAFTA), which increased their participation to 23% (2020: 17%) and offset the lower sales to Brazil, a market strongly affected by the pandemic,” according to Enka.

‘Green’ Businesses

Income in this segment rose 3% year-on-year, to COP$34 billion (US$9.2 million), accounting for 33% of sales, while exports of “green” products amounted to US$1 million, or 11% of business revenues.

Waste-plastic-bottle uptake “grew 24% versus 4Q 2020 due to the pricing and recovery strategy and gradual development of the PET market, which covered the current demand of the ‘EKO-PET’ plant (4,510 tonnes), ensuring operation of the plant at 100% in the period,” according to Enka.

As for the “EKO-Fibras” market (2,740 tonnes), this dipped 422 tonnes “mainly in Brazil and Argentina due to the effects of Covid19.”

As for the “EKO-Polyolefins” market (373 tonnes), demand fell 193 tonnes “due to lower inventories and reduction in bottle collection by Covid-19 in 2020, partially offset by better margins,” according to the company.

Textile and Industrial Businesses

Excluding a temporary dip in virgin PET production, revenues rose 2% year-on-year, to COP$70 billion (US$19 million), “due to higher international prices that offset the lower volume (-2%),” according to Enka. “Exports reach US$11.5 million, representing 92% of the company's exports.”

Industrial threads tonnage sales (3,319 tonnes) grew 8% year-on-year “due to strategy in ‘Lona,’ which grew by 29%, against technical thread sales where the most profitable markets are prioritized,” according to Enka.

The textile filaments division (2,018 tonnes) saw a 20% decline in sales volume “due to the pandemic that affected demand both in the local market and in exports. Although sales have been recovering its dynamics have not yet reached the levels prior to Covid-19,” according to Enka.

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Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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