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Enka's Novel Industrial Fibers Boost Profits Enka's Novel Industrial Fibers Boost Profits Source: Enka de Colombia

Enka 1H 2021 Profits Rebound Year-on-Year

Published in Companies Written by  August 15 2021 font size decrease font size increase font size 0
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Medellin-based textile and recycled plastics specialist Enka de Colombia announced August 13 that its first half (1H) 2021 net profits jumped to COP$29 billion (US$7.5 million), a reversal from a COP$4.4 billion (US$1.1 million) net loss in 1H 2020.

Earnings before interest, taxes, depreciation and amortization (EBITDA) came-in at an all-time historic high -- COP$37 billion/US$9.6 million -- “favored by the situation of high international [textile] prices, the devaluation of the Colombian peso and the recovery in sales of textiles, industrial fibers and our ‘EKO’ recycled fibers,” according to Enka.

Construction of Enka’s new PET (polyethylene terephthalate) “Bottle-to-Bottle” recycling plant, “which will double our installed capacity, is progressing smoothly with investments of COP$21.2 billion [US$5.5 million] and it is expected to start operations by the end of 2022,” according to the company.

“The national strike during the month of May mainly affected local sales in some regions of the country and generated disruptions in the supply chain.

“Proper management of this situation avoided the interruption in the supply of essential raw materials and guaranteed the continuous operation of the plant to meet the sales commitments of our local and foreign customers. However, an economic impact due to unemployment cost overruns of close to COP$2 billion [US$520,000] is calculated, the vast majority of which will be seen reflected in the third quarter of this year,” the company added.

Operating income for 1H 2021 ended at COP$241 billion (US$62.7 million), up 50% year-on-year, “mainly due to the recovery of sales after the closings due to Covid-19, higher international prices and the reactivation of sales of virgin PET as a local supply alternative for customers,” according to Enka.

“The company continues with a solid financial position, ending the quarter with cash available in excess of COP$68 billion (US$17.7 million), a negative net debt ratio of -0.3-times EBITDA, even after investing in construction of the new Bottle-to-Bottle PET recycling plant, with costs amounting to COP$21 billion (US$5.4 million).

“Total assets increased by COP$55.5 billion (US$14.4 million) compared to the previous year, reaching COP$667 billion (US$174 million), mainly due to an increase in working capital derived from the increase in sales and investments in fixed assets for projects.

“On the other hand, total liabilities increased by COP$32 billion (US$8.3 million), ending at COP$230.6 billion (US$60 million), mainly in the supplier category to finance higher inventory levels,” the company added.

Through June 2021, exports accounted for 44% of sales, including strong growth in sales to the NAFTA countries (United States, Mexico and Canada), which now account for 23% of all sales, “offsetting other markets such as Brazil that have had a slower rate of recovery,” according to Enka.

‘Green’ Businesses Grow

Accumulated revenues for Enka’s “Eko” line of recycled products grew 21% year-on-year, to COP$68.5 billion (US$17.8 million), accounting for 31% of total sales, “mainly due to the recovery of sales of ‘EKO-Fibers.’ Exports represent 11% of the income of this line of business,” according to the company.

“EKO-PET” sales were 8,608 tons, with plant operation at full capacity. “Prices have increased in 2021 due to temporary supply restrictions for virgin PET due to the international freight situation and the cold wave in Texas (USA) at the beginning of 2021,” according to Enka.

“EKO-Fibers” (5,160 tons) volume grew 25% (+1,022 tons), “mainly due to the recovery of local and Brazilian demand, affected in 2020 by Covid-19,” according to the company.

“EKO-Polyolefins” (815 tons) sales dipped by 22% “due to high inventories in 2020 generated at the start-up of the plant. This year sales are adjusted to the availability of by-products (caps and labels) from current recycling processes,” according to Enka.

“Eko-Red” bottle uptake “continues to recover after the impact of Covid-19. Unfortunately, the collection of bottles was affected by the national strike, which strongly affected recycling volumes in the south of the country and generated difficulties and logistical cost overruns in much of the national territory,” the company added.

Textile and Industrial Threads Businesses

Excluding the production of virgin PET, the operating income of these textile-business lines ended at COP$152 billion (US$39.5 million), “47% higher than the previous year, due to higher sales volume and higher international prices,” according to Enka.

Industrial Yarns (6,595 tons) volume increased 32% (+1,615 tons), “highlighting the growth in canvas (+1,106 tons, up 47%) due to the strategy of strengthening Enka's position as the strategic supplier for the main tire companies in the region.”

Technical Threads sales grew 19% (+510 tons), “mainly in the USA and Colombia, offsetting lower demand in Brazil and substituting for lower-profit, non-strategic businesses.”

Textile Filaments (4,038 tons) sales grew 22% (+737 tons) “as a result of the recovery of demand affected by Covid-19 and difficulties in importing Asian products, benefiting mainly the sales of Nylon Filaments. Continuous Polyester Filaments showed a slow recovery,” the company added.

Read 164 times Last modified on Last modified on August 18 2021

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