Global Headwind in 2023 Pressure on IVL’s Earnings Performance, Still Offering THB0.175 Dividend

Indorama Ventures Public Company Limited (SET: IVL) has announced its 2023 consolidated financial statement through the Stock Exchange of Thailand as follows;

IVL reported a net loss of $310 million in 2023, compared to a net profit of $884 million in 2022.

IVL delivered 2023 revenue of US$15.6B, down 17% YoY, EBITDA of US$1.12B, a decline of 53% YoY from the peak performance year of 2022, and a core EBITDA of US$1.3B decline of 44% YoY. Average Brent crude oil price for the year was $83/barrel (decline of 18% YoY), resulting in inventory loss of US$115M vs inventory gain of $76 million in 2022. Full year results were impacted by the challenging macroeconomic environment, characterized by Russia/Ukraine conflict, inflationary pressures, high interest rates, and sluggish economic growth in Europe and China.

Meanwhile, group volumes declined by 4% YoY, creating a negative impact of US$318M YoY primarily driven by the unprecedented destocking trend that began in the second half of 2022 following supply chain normalization and crude oil price decline. This was further exacerbated by the higher interest rate environment, lower than expected growth in China and slow demand in Europe. This impact was substantially overcome with Energy costs lowered through the year, especially in the West, reducing operating costs by US$252M, net of hedging loss of US$103M in 2023 and US$78M operational excellence captured through Olympus 1.0.

With regards to the aromatics sector specifically, 2023 posed significant headwinds in the form of destocking, high feedstock costs in the West, and compressed Chinese benchmark margins. These factors influenced IVL’s performance in terms of both volume and value. 2023 has been a challenging year, but the company has taken several measures to counterbalance the external pressures, achieving positive free cash flow of US$149M.

Geographically, results declined across all three regions with EMEA being the most impacted, turning from positive to negative EBITDA contribution in 2023 due to both volume and margin pressure, as well as continued high energy prices albeit lower than 2022.

In the IOD segment, spreads declined by US$188M YoY. Integrated Intermediates results were lower by 16% YoY due to poor MEG spreads, while MTBE margins remained supported through the year bolstered by strong gasoline demand and low raw material costs. Integrated Downstream performance was impacted by US$219M, lower by 42% YoY, due to destocking, loss of volumes in premium margin segments such as Crop Solutions and import pressure in South America.

IVL stated that for the management’s action this year, there has been a concerted effort to manage cash this year, resulting in operating cash flow of US$1.5B (136% cash conversion), supported by US$513 release of working capital and 9 days reduction in working capital days. In addition, capex plans have been reduced by US$276M from what was announced at the beginning of the year. Cash conservation remains a priority for 2024.


“2024 is expected to continue to remain challenging albeit with some improvement. We anticipate around 4% to 5% increase in volumes with destocking having bottomed out across most product categories as interest rates decline from their 2023 peak, coupled with a modest improvement in margins.

We believe the current benchmark integrated PET spread is not sustainable and anticipate a gradual recovery going forward. With anti-dumping duties and other trade barriers in markets like the EU, Mexico, India, and others, IVL’s premium spread over China’s benchmark is expected to widen, which stands to benefit IVL since the majority of our operations is situated outside of China.

We believe gasoline demand will begin to stabilize going forward as post-Covid activity normalizes. Coupled with a global balancing of refinery production, the regional MX price disparity will narrow, aiding our Western polyester business with lower feedstock costs.

We continue to stringently review our capital allocation to conserve cash and lower fixed costs. Each business segment has identified areas of focus with detailed and resourced action plans to remain vigilant on this front. For instance, the Fibers segment has identified four operational priority areas for 2024 (operating rates, fixed cost, commercial excellence, and working capital) with an emphasis on EBITDA and cash flow enhancement. Fibers also remains on track with the footprint optimization plans announced earlier in 2023,” the company wrote in a publication of its earnings report.


In addition, the Board of Directors approved a dividend payment for its operation in 2023 at THB0.175 per share to be paid on 23 May 2024. The ex-dividend date is 3 May 2024.