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'Eko-Pet' Recycling Plant Nearly Complete 'Eko-Pet' Recycling Plant Nearly Complete Source: Enka

Enka Nine-Months 2022 Net Income Drops by 57% Year-on-Year

Published in Companies Written by  November 10 2022 font size decrease font size increase font size 0
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Medellin-based textiles and plastics-recycling specialist Enka announced November 10 that its nine-months 2022 cumulative net income has dropped 57% year-on-year, to COP$18 billion (US$3.7 million million).

Enka blamed the profits decline on “exchange differences [the declining value of the Colombian peso against the U.S. dollar] and an increase in financial expenses, due to an increase in rates and greater indebtedness,” according to the company.

While gross revenues rose 15.7% year-on-year, to COP$460 billion (US$96 million), earnings before interest, taxes, depreciation and amortization (EBIDTA) fell 28%, to COP$44.5 billion (US$9.3 million).

“After a positive start to the year, in the third quarter profit margins and sales volumes have been affected by two main factors,” according to Enka:

“First, the European energy crisis -- unleashed by the conflict in Ukraine -- has increased significantly the demand for coal and, as a consequence, our costs of energy generation.

“Second, inflationary pressures and monetary policies of central banks have begun to affect the world demand and put downward pressure on the prices of raw materials.

“To face this situation, the company has developed different markets to mitigate the lower demand and continue to rotate their inventories in order to reduce exposure to higher price reductions in the face of a possible global recession, which increasingly seems more probable.”

The boost in operating income came “mainly due to higher international prices and the strengthening of the dollar, which offset a lower demand and lower short-term sales of virgin PET,” according to the company.

As for the decline in EBITDA, this came “mainly due to lower demand from the textile and industrial businesses, higher energy costs and inflationary effect on fixed costs and expenses,” according to the company.

Meanwhile, Enka reports that its new “EKO-PET” plastic bottles recycling plant “is already undergoing final tests and set-up for its entry into operation,” the company stated..

That plant -- with executed capex of COP$93.7 billion (US$19.5 million) to date, or about 84% of the total investment -- is “advancing under the schedules and estimated budgets,” according to Enka.

Exports reached US$49.5 million (44% of total income) -- higher by 23% compared to nine-months 2021 -- “mainly due to the strong increase in international prices. The good performance of demand in Brazil has contributed to increase export participation in sales at 20%, from 16% in 2021,” according to Enka.

Recycling ‘Green Business’ Results

In its recycling sector, revenues rose 36% year-on-year “due to higher prices that compensate for a 7% lower volume of sales. Green business participation in total sales rose to 32% versus 28% in 2021,” according to Enka.

“The three recycling plants operate at maximum capacity, with ‘EKO-FIBRAS’ increasing its sales from colored bottles for geotextiles, along with high-value-added products, allowing to mitigate the strong, low-price Asian competition,” according to Enka.

Textile and Industrial Business Results

Excluding sales of virgin PET, revenues rose 16% year-on-year, “as a result of higher international prices and the decline in the exchange rate, which offset a 15% decrease in volume,” according to Enka.

Textiles and international sales accounted for 64% of total sales, matching nine-months 2021 results.

Industrial yarns revenues increased 24% year-on-year “mainly due to higher international prices and exchange rate that compensate for the 8% lower sales volume mainly in ‘Tarpaulin’ for tires in the USA due to lower demand partially mitigated by better behavior of Brazil,” according to Enka.

Textile filaments volumes declined 12% in the local market “due to reduction in Asian prices, but export income increased by 7% mainly due to the higher [U.S. dollar/COP] exchange rate,” according to Enka.

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