Indorama Ventures Public Company Limited (INDOY) Full Year 2024 Results Earnings Call Transcript

2025-02-28 03:03:39 ET

Indorama Ventures Public Company Limited (INDOY)

Full Year 2024 Results Earnings Conference Call

February 26, 2025 9:00 PM ET

Company Participants

Vikash Jalan – Investor Relations and Planning

DK Agarwal – Deputy Group Chief Executive Officer

Muthukumar Paramasivam – President and Co-Leader, CPET

Kumar Ladha – President and Co-Leader, CPET

Alastair M Port – Executive President, Indovinya

Diego Boeri – Executive President, Fibers

Conference Call Participants

Naphat Chantaraserekul – CLSA

Presentation

Vikash Jalan

Good morning. Welcome, everyone, and thank you for taking time for joining us for Indorama Ventures Full Year 2024 Results Briefing Meeting. My name is Vikash Jalan, Investor Relations and Planning at IVL. Joining me today, Mr. DK Agarwal, Deputy Group CEO; Muthukumar Paramasivam and Kumar Ladha, President & Co-Leaders CPET segment; Alastair M Port joining us online from the U.S., Executive President for Indovinya; and Diego Boeri, Executive President for Fibers. A quick disclaimer. This meeting is being recorded, and a replay of this session will be available on our website after the meeting. We have made a few assumptions and estimates on future industry and business trends, based on our analysis of available information at this point in time.

So with that, I now invite Mr. Agarwal to first share the business and financial highlights. And after the prepared presentation, we will open up the session, the floor for Q&A. Over to you please, Mr. Agarwal.

DK Agarwal

Thank you, Vikash. Very good morning to all of you joining us on the year-end analyst meet. As we always present let us review the macroeconomic landscape, which directly or indirectly impacted the industry as well as our businesses. The world is passing through one of the biggest turmoil periods. In quarter four, the U.S. and China saw some marginal improvement, supported by rising production and new orders, while Europe remained challenging due to weak demand, as you can see on the extreme left top graph. The freight rates declined due to additional vessel capacity, which got added, and we also saw improvement in the Red Sea crisis. On energy front, weak demand and ample supply kept oil prices lower. They have been very volatile in fourth quarter 2024. Meanwhile, interest rates marginally declined as inflation continues to be moderated, although, as you know, post-Trump policies, we see that interest rates may remain elevated for some time.

Looking at what is the recent U.S. elections has impact on our business are expected to support the U.S. economy in the coming years. As you know the IVL has been a geographically diversified company as a local producer in the United States, generating nearly 40% of the revenue of IVL and 50% of the EBITDA. And if you take entire Americas, include Brazil and America, Brazil and Mexico, it is 70% of IVL EBITDA. So IVL, we believe, will stand to benefit from potential tariff increases, which may happen, potential corporate tax reductions, and lower shale gas prices driven by increased oil and gas production as drill, baby, drill works. However, his win also brings headwinds, starting with inflationary pressure that could impact demand for certain products, particularly in the consumer demands like Indovinya fiber. Additionally, potential trade barriers would benefit IVL operation due to local production base, as I mentioned. With these challenges, our significant presence in the United States provides us a strong advantage and overall we expect positive impact for IVL from this move in United States.

Now let me walk you through the financial results for the entire year. In 2024, we know that industry has been very challenging. IVL took decisions, timely actions to fortify its market leadership and secure a sustainable growth path as the company pivots towards systemic, generational change in the chemical industry. In a year of alignment, mobilization, and launch, management began executing a company's three years IVL 2.0 transformation strategy. As you remember, in CMD, we announced in March with a singular focus on optimizing global assets. This means shutting down high-cost assets, reducing debt, enhancing cash flows, and implementing next-generation digital and leadership program to achieve our stated 2026 targets.

Now I'm very happy to report that these disciplined self-help management actions helped bolster full-year earnings as global chemical markets continue to struggle through 2024 in one of the most challenging downturns in the recent history, as you might have noticed from results of many chemical industries. The industry's future is being irrevocably shaped by long-term macroeconomic themes, including the unequal impact of Peak Oil between East and West, as we know the feedstock disparity between East and West, China's ambition to continue to expand its own production, India's enormous growth engine, and one of the most unstable geopolitical environments in the generation....

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