Lotte Pakistan, a leading supplier of purified terephthalic acid (PTA) – an essential input in PSF production, has witnessed a jump in primary PTA margins during the last quarter of 2010.
“The outgoing quarter proved to be one of the best for PTA manufacturers around the globe as primary margins improved by 18 per cent quarter-on-quarter to $295 per ton compared with $250 per ton in the third quarter of 2010,” read a report published by Topline Securities.
Primary PTA margin is the spread between the prices of PTA and the key raw material in its production, Paraxylene (Px).
During the period, PTA prices improved by 28 per cent to average out at $1,116 per ton, compared with $870 per ton in the preceding quarter. However, Px prices also registered an increase in the last quarter of the outgoing year on the back of rising oil prices and plant shutdown in Europe because of weather concerns. Px prices averaged around $1,227 per ton, compared with $927 a ton in the July-September period.
Nonetheless, Lotte Pakistan is expected to witness the highest ever profitability in the outgoing year (2010) on the back of hefty primary margins and higher return on investments, despite the fact that the company closed down its plant for 16 days in November.
Furqan Punjani from Topline expects the company to post a profit of Rs4.4 billion for 2010, compared with Rs3.2 billion in the preceding year.
“Assuming average primary margins of $295 per ton, earnings per share (EPS) for the last quarter of 2010 is estimated to remain around Rs0.85 per share, 27 per cent higher quarter-on-quarter. Thus this would take our full-year earnings estimates to Rs2.92 per share compared with Rs2.1 in 2009.”
Published in The Express Tribune, January 5th, 2011.
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