Solvay Indupa, a leading PVC and sodium hydroxide producer in Argentina and Brazil, saw its loss widen to 144.7 million pesos ($30.3 million) in the first nine months of 2012 from 10.1 million pesos in the year-earlier period as sales fell and costs rose.
The Buenos Aires-based company, which is controlled by Belgium's Solvay Group, said in a preliminary financial report that sales revenue fell 1.1% to 2.399 billion pesos in the first nine months of 2012 compared with 2.423 billion pesos in the January-September period of 2011.
Over the same period, the cost of goods sold rose to 2.2 billion pesos from 2.07 billion pesos, the company said late Wednesday in a filing with the Buenos Aires Stock Exchange. Indupa also reported higher distribution and selling costs, while administrative expenses remained stable.
The company blamed the weaker performance on low PVC prices in Argentina and Brazil and a flood of cheaper PVC from foreign suppliers.
The business also took a hit from a seasonal decline in the supply of natural gas feedstock, in particular during the third quarter. Argentina has been suffering chronic gas shortages over the past decade during the colder months of May to September on dwindling gas production and rising demand. Faced with more than three years of poor results due to domestic gas shortages and the global financial crisis, Indupa said Monday that it will review its business plans for the long term. An announcement of its findings will be made at the end of the year, Indupa said.
On the brighter side, the company said PVC sales in Argentina rose 16% in the third quarter from a year earlier as buyers bought supplies to replenish sagging inventories.
Yet PVC imports rose 30% over the same period as producers elsewhere turned to Latin America to sell product as demand suffers in other markets. Much of the imported supplies were sold at below-market prices, making it harder for Indupa to compete, it said.
The company added that rising domestic sales and a decline in ethylene feedstock led to a 37% reduction in its export volumes over the same period. Liquid sodium hydroxide sales in Argentina rose 5% in the third quarter compared with the year-earlier period and fell 4% compared with the second as buyers reduced consumption because of a lack of gas for operations, Indupa said.
In Brazil, PVC sales rose 11% in the third quarter compared with the year-earlier period on steady orders from public works projects as well as from makers of film, cables and laminates. Liquid sodium hydroxide sales rose 2% over the same period in Brazil, it added.
Indupa produces PVC at a 240,000 mt/year facility in Bahia Blanca and at a 274,000 mt/year plant in Santo Andre, Brazil. It also produces chlorine, ethylene dichloride and vinyl chloride, among other products.
