Orbia Announces First Quarter 2024 Financial Results
Orbia’s first quarter performance reflects the continued weakness in the market environment, primarily driven by sustained elevated interest rates, lower prices, delays in private and public infrastructure projects and continued subdued demand in
Q1 2024 Financial Highlights
(All metrics are compared to Q1 2023 unless otherwise noted)
-
Net revenues of
$1.9 billion decreased 18%, driven primarily by lower volumes and lower prices in Connectivity Solutions, Polymer Solutions and Building & Infrastructure. -
EBITDA of
$253 million decreased 46%, driven by lower revenues and the negative impact from the Mexican Peso appreciation across most business groups. -
Operating cash outflow of
$50 million decreased by$217 million due primarily to lower EBITDA.
“Our first quarter results were in line with the guidance that we shared for the first half of the year. While we are seeing month over month improvements in some of the businesses, interest rates staying higher for longer may further delay demand recovery, necessitating a continued prudent approach. Meanwhile we continue to maintain leading market positions, exercise tight financial discipline, and carry out business optimization actions that position us well for when markets recover. We remain committed to our long-term strategy, supported by the strategic growth projects that are underway, consistent with our mandate to generate sustainable shareholder value, while maintaining a strong balance sheet.” said
Q1 2024 Consolidated Financial Information1 (All metrics are compared to Q1 2023 unless otherwise noted) |
||||||
mm US$ | First Quarter | |||||
Financial Highlights |
2024 |
2023 |
% Var. | |||
Net sales |
1,863 |
|
2,280 |
|
-18% |
|
Cost of sales |
1,431 |
|
1,620 |
|
-12% |
|
Selling, general and administrative expenses |
326 |
|
336 |
|
-3% |
|
Operating income |
106 |
|
323 |
|
-67% |
|
EBITDA |
253 |
|
469 |
|
-46% |
|
EBITDA margin |
13.6% |
|
20.6% |
|
-701 bps |
|
Financial cost |
139 |
|
101 |
|
37% |
|
Earnings (Loss) before taxes |
(32) |
|
223 |
|
N/A |
|
Income tax |
15 |
|
143 |
|
-89% |
|
Consolidated net (loss) income |
(47) |
|
80 |
|
N/A |
|
Net majority (loss) income |
(74) |
|
55 |
|
N/A |
|
Operating cash inflow (outflow) |
(50) |
|
167 |
|
N/A |
|
Capital expenditures |
(132) |
|
(142) |
|
-7% |
|
Free cash inflow (outflow) |
(201) |
|
1 |
|
N/A |
|
Net debt |
3,678 |
|
3,246 |
|
13% |
___________________ |
1 Unless noted otherwise, all figures in this release are derived from the Consolidated Financial Statements of the Company as of |
Net revenues of
The decrease in revenues for the quarter was driven by Connectivity Solutions, Polymer Solutions and Building & Infrastructure, primarily due to the continued weak demand and lower prices as a result of the high interest rate environment and exports of excess PVC capacity in
Cost of sales of
The decrease in cost of goods was driven primarily by lower volumes as well as lower raw material and input costs.
Selling, general and administrative expenses of
The decrease in selling, general and administrative expenses for the quarter was driven primarily by benefits from cost reduction initiatives, partially offset by inflation.
EBITDA of
The decrease in EBITDA and EBITDA margin was due to lower volumes and prices, particularly in Connectivity Solutions, Polymer Solutions and Fluor & Energy Materials. In addition, profitability was impacted by lower absorption of fixed costs and the appreciation of the Mexican Peso.
Financial costs of
The increase in financial costs was largely driven by foreign exchange impacts from the appreciation of the Mexican Peso and higher interest expense due to an increase in debt. These factors were partially offset by higher interest income earned on cash balances.
Taxes of
Net majority loss to shareholders of
Operating cash outflow of
The decrease in operating cash flow and free cash flow was driven by lower EBITDA.
Net debt of
Q1 Revenues by Region (All metrics are compared to Q1 2023 unless otherwise noted) |
||||||||
mm US$ | First Quarter | |||||||
Region |
2024 |
2023 |
% Var. Prev Year | % Revenue | ||||
|
671 |
|
869 |
|
-23% |
|
36% |
|
|
588 |
|
749 |
|
-22% |
|
32% |
|
|
375 |
|
381 |
|
-2% |
|
20% |
|
|
176 |
|
223 |
|
-21% |
|
9% |
|
|
53 |
|
58 |
|
-8% |
|
3% |
|
Total |
1,863 |
|
2,280 |
|
-18% |
|
100% |
Q1 Financial Performance by
(All metrics are compared to Q1 2023 unless otherwise noted)
Polymer Solutions (
Orbia’s Polymer Solutions business group (commercial brands Vestolit and Alphagary) focus on general purpose and specialty PVC resins (polyvinyl chloride), PVC and zero-halogen specialty compounds with a wide variety of applications in everyday products for everyday life, from pipes and cables to household appliances and medical devices. The business group supplies Orbia’s downstream businesses and a global customer base.
mm US$ | First Quarter | |||||
Polymer Solutions |
2024 |
|
2023 |
|
%Var. |
|
Total sales* |
658 |
|
770 |
|
-15% |
|
Operating income |
24 |
|
83 |
|
-71% |
|
EBITDA |
86 |
|
147 |
|
-41% |
|
*Intercompany sales were |
Revenues of
The decrease in revenues for the quarter was driven primarily by lower prices in PVC and caustic soda due to increased exports from
EBITDA decreased year-over-year, driven by lower prices in all businesses, partly offset by lower ethane cost in the
Building & Infrastructure (Wavin), 32% of Revenues
Orbia’s Building & Infrastructure business group (commercial brand Wavin) is redefining today’s pipes and fittings industry by creating solutions that last longer and perform better, all with less installation labor required. The business group benefits from supply chain integration with the Polymer Solutions business group, a customer base spanning three continents, and investments in sustainable, resilient technologies for water and indoor climate management.
mm US$ | First Quarter | |||||
Building & Infrastructure |
2024 |
|
2023 |
|
%Var. |
|
Total sales |
622 |
|
694 |
|
-10% |
|
Operating income |
33 |
|
39 |
|
-15% |
|
EBITDA |
65 |
|
70 |
|
-7% |
Revenues of
The decrease in revenues for the quarter was primarily driven by lower volumes and prices associated with lower input costs. The Business continued to experience challenging market conditions across parts of Western and
EBITDA declined year-over-year mainly attributable to lower volumes. Despite lower volumes, EBITDA margin improved slightly due to continued business optimization and controlled discretionary spending.
Precision Agriculture (
Orbia’s Precision Agriculture business group’s (commercial brand
mm US$ | First Quarter | |||||
Precision Agriculture |
2024 |
|
2023 |
|
%Var. |
|
Total sales |
256 |
|
275 |
|
-7% |
|
Operating income |
2 |
|
3 |
|
-33% |
|
EBITDA |
29 |
|
28 |
|
1% |
Revenues of
Revenues decreased due to lower volumes mainly in
EBITDA increased slightly despite lower revenues supported by improved operational efficiencies.
Connectivity Solutions (Dura-Line), 10% of Revenues
Orbia’s Connectivity Solutions business group (commercial brand Dura-Line) produces more than 500 million meters of essential and innovative connectivity infrastructure per year to bring a world’s worth of information everywhere. The business group produces telecommunications conduit, cable-in-conduit and other HDPE products and solutions that create physical pathways for fiber and other network technologies connecting cities, homes and people.
mm US$ | First Quarter | |||||
Connectivity Solutions |
2024 |
|
2023 |
|
%Var. |
|
Total sales |
197 |
|
345 |
|
-43% |
|
Operating income |
14 |
|
104 |
|
-87% |
|
EBITDA |
24 |
|
114 |
|
-79% |
Revenues of
Revenues were impacted by lower volumes due to customer inventory management, project timing as a result of high interest rates, and unfavorable mix. Slower rollout of public infrastructure funding is also impacting near term demand.
EBITDA decreased driven by lower volume, unfavorable product mix, and higher fixed costs due to lower cost absorption in existing and new facilities. These factors were partly mitigated by benefits from tight cost controls.
Fluor & Energy Materials (
Orbia’s newly renamed Fluor & Energy Materials business group (commercial brand
mm US$ | First Quarter | |||||
Fluor & Energy Materials |
2024 |
2023 |
%Var. |
|||
Total sales |
190 |
242 |
-22% |
|||
Operating income |
40 |
87 |
-54% |
|||
EBITDA |
54 |
102 |
-47% |
Revenues of
Revenues for the quarter decreased due to lower refrigerant volumes, which were partly due to step-down in F-gas quotas in the
EBITDA decreased due to lower revenues and adverse effects from the continued strength of the Mexican Peso, which was partly offset by cost control efforts.
Balance Sheet, Liquidity and Capital Allocation
Orbia’s net debt-to-EBITDA ratio increased from 1.84x to 2.96x year-over-year. The increase was primarily due to the lower EBITDA as well as an increase in net debt primarily attributable to the appreciation of the Mexican Peso and seasonal working capital needs.
On
During the quarter Orbia paid down
Working capital increased by
During the quarter Orbia did not pay dividends due to the timing of their approval in the annual shareholder meeting, which was held on
Q1 2024 Sustainability Highlights
Orbia released its 2023 Impact Report in early March. This year’s issue prived details regarding the Company’s overall performance as well as key updates in advancing sustainability solutions along its three strategic pillars: low impact operations, sustainability solutions and investments in high impact ventures, including:
-
More detailed information on clean technology investments across the business groups and through
Orbia Ventures ; - The results of Orbia’s first double materiality assessment in accordance with new emerging ESG regulation;
- Updated climate risk and opportunity assessment;
- Details on the Company’s net-zero roadmap;
- New Water Positive framework and
- New Orbia Supplier Code of Conduct
Orbia is also proud of the continued expansion of its sustainable solutions portfolio, including Fluor & Energy Material’s new low global warming potential refrigerants, Precision Agriculture’s innovative digital farming add-ons and Connectivity Solutions’ launch of the FuturePath ECO and MicroDuct ECO conduit in
Demonstrating the Company’s commitment to sustainability, three Orbia Venture’s portfolio companies (Ascend Elements, Verdagy, and Tortuga AgTech) earned recognition from
2024 Outlook
During the first quarter of 2024, Orbia performed according to expectations shared in the fourth quarter 2023 update, with soft demand present across the Company’s end markets. Nevertheless, the Company remains cautious due to the limited visibility around inflation persistence and the possibility of interest rates staying higher for longer across the globe. Therefore, the current EBITDA guidance for the full year 2024 is
Conference Call Details
Orbia will host a conference call to discuss Q1 2024 results on
Participants may pre-register for the conference call here.
The live webcast can be accessed here.
A recording of the webcast will be posted several hours after the call is completed on Orbia’s website.
For all company news, please visit www.orbia.com/this-is-orbia/newsroom.
__________________ |
2 Excluding the impact of inflation and foreign exchange rate changes in |
Consolidated Income Statement |
||||||
mm US$ | First Quarter | |||||
Income Statement |
2024 |
|
2023 |
|
% |
|
Net sales |
1,863 |
|
2,280 |
|
-18% |
|
Cost of sales |
1,431 |
|
1,620 |
|
-12% |
|
Gross profit |
432 |
|
660 |
|
-35% |
|
Selling, general and administrative expenses |
326 |
|
336 |
|
-3% |
|
Operating income |
106 |
|
323 |
|
-67% |
|
Financial cost (income) |
139 |
|
101 |
|
37% |
|
Equity income from associated entities |
1 |
|
1 |
|
55% |
|
Impairment expense |
- |
|
- |
|
N/A |
|
Income (loss) from continuing operations before income tax |
(32) |
|
223 |
|
N/A |
|
Income tax |
15 |
|
143 |
|
-89% |
|
Income (loss) from continuing operations |
(47) |
|
80 |
|
N/A |
|
Discontinued operations |
- |
|
- |
|
N/A |
|
Consolidated net income (loss) |
(47) |
|
80 |
|
N/A |
|
Minority stockholders |
27 |
|
25 |
|
6% |
|
Majority Net income (loss) |
(74) |
|
55 |
|
N/A |
|
|
|
|
|
|
||
EBITDA |
253 |
|
469 |
|
-46% |
Consolidated Balance Sheet | ||||||
|
||||||
mm US$ |
||||||
Balance sheet |
|
|
|
|||
Total assets |
11,274 |
|
11,552 |
|
11,777 |
|
Current assets |
4,006 |
|
4,170 |
|
4,649 |
|
Cash and temporary investments |
1,050 |
|
1,456 |
|
1,384 |
|
Receivables |
1,688 |
|
1,461 |
|
1,528 |
|
Inventories |
1,212 |
|
1,200 |
|
1,279 |
|
Others current assets |
56 |
|
53 |
|
458 |
|
Non current assets |
7,268 |
|
7,382 |
|
7,128 |
|
Property, plant and equipment, net |
3,365 |
|
3,370 |
|
3,199 |
|
Right of use fixed assets, net |
473 |
|
469 |
|
361 |
|
Intangible assets and goodwill |
3,090 |
|
3,148 |
|
3,134 |
|
Long-term assets |
340 |
|
395 |
|
434 |
|
Total liabilities |
8,153 |
|
8,334 |
|
8,603 |
|
Current liabilities |
2,485 |
|
2,537 |
|
3,330 |
|
Current portion of long-term debt |
295 |
|
466 |
|
691 |
|
Suppliers |
1,256 |
|
1,228 |
|
1,311 |
|
Short-term leasings |
115 |
|
106 |
|
90 |
|
Other current liabilities |
819 |
|
737 |
|
1,238 |
|
Non current liabilities |
5,668 |
|
5,797 |
|
5,273 |
|
Long-term debt |
4,433 |
|
4,420 |
|
3,938 |
|
Long-term employee benefits |
137 |
|
139 |
|
137 |
|
Long-term deferred tax liabilities |
240 |
|
359 |
|
388 |
|
Long-term leasings |
378 |
|
383 |
|
281 |
|
Other long-term liabilities |
480 |
|
496 |
|
530 |
|
Consolidated shareholders' equity |
3,121 |
|
3,218 |
|
3,174 |
|
Minority shareholders' equity |
608 |
|
604 |
|
657 |
|
Majority shareholders' equity |
2,513 |
|
2,614 |
|
2,517 |
|
Total liabilities & shareholders' equity |
11,274 |
|
11,552 |
|
11,777 |
Cash Flow Statement |
||||||
mm US$ | First Quarter | |||||
Cash Flow Statement |
2024 |
|
2023 |
|
%Var. |
|
EBITDA |
253 |
|
469 |
|
-46% |
|
Taxes paid, net |
(46) |
|
(64) |
|
-28% |
|
Net interest / bank commissions |
(64) |
|
(74) |
|
-14% |
|
Change in trade working capital |
(193) |
|
(181) |
|
6% |
|
Others (other assets - provisions, Net) |
9 |
|
(19) |
|
N/A |
|
CTA and FX |
(9) |
|
36 |
|
N/A |
|
Operating cash inflow (outflow) |
(50) |
|
167 |
|
N/A |
|
Capital expenditures |
(132) |
|
(142) |
|
-7% |
|
Leasing payments |
(19) |
|
(24) |
|
-20% |
|
Free cash inflow (outflow) |
(201) |
|
1 |
|
N/A |
|
Dividends to shareholders |
- |
|
- |
|
|
|
Buy-back shares program |
- |
|
2 |
|
N/A |
|
Debt |
(173) |
|
(128) |
|
35% |
|
Minority interest payments |
(27) |
|
(31) |
|
-14% |
|
Mergers & acquisitions |
- |
|
- |
|
|
|
Financial instruments and others |
(5) |
|
(7) |
|
-24% |
|
Net change in cash |
(406) |
|
(163) |
|
149% |
|
Initial cash balance |
1,456 |
|
1,546 |
|
-6% |
|
Cash balance |
1,050 |
|
1,456 |
|
-28% |
Notes and Definitions
The results contained in this release have been prepared in accordance with International Financial Reporting Standards (“NIIF” or “IFRS”) with
Figures and percentages have been rounded and may not add up.
About Orbia
Prospective Information
In addition to historical information, this press release contains "forward-looking" statements that reflect management's expectations for the future. The words “anticipate,” “believe,” “expect,” “hope,” “have the intention of,” “might,” “plan,” “should” and similar expressions generally indicate comments on expectations. The forward-looking statements included in this press release are subject to a number of material risks and uncertainties, and our results may be materially different from current expectations due to factors, which include, but are not limited to, global and local changes in politics, economic factors, business, competition, market and regulatory factors, cyclical trends in relevant sectors as well as other factors affecting our operations, markets, products, services and prices that are highlighted under the title “Risk Factors” in the annual report submitted by Orbia to the
Orbia has implemented a Code of Ethics that helps define our obligations to and relationships with our employees, clients, suppliers, and others. Orbia’s Code of Ethics is available for consultation at the following link: http://www.Orbia.com/Codigo_de_etica.html. Additionally, according to the terms contained in the Mexican Securities Exchange Act No 42, the Orbia Audit Committee has established a “hotline” system permitting any person who is aware of a failure to adhere to applicable operational and accounting records guidelines, internal controls or the Code of Ethics, whether by the Company itself or any of its controlled subsidiaries, to file a complaint (including anonymously). This system is operated by an independent third-party service provider. The system may be accessed via telephone in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240425794193/en/
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