Rising global rates have little impact on Indorama Ventures Public Company Limited (IVL) as most of its debts are fixed interest rate borrowings while the company’s cashflow remains strong, said D K Agarwal, chief executive officer/Feedstock and PET business.
Despite the uptrend in global rates, IVL – one of the world's largest chemical manufacturers – has managed its financial risks well, he said.
About 60 per cent of the debts carry fixed rates, with the balance under floating rates, said Agarwal, adding the company had issued debentures in the local market.
IVL borrows money in the local market where it operates. For instance, our business unit in Europe borrows funds in euro at low interest rate while its counterpart in the US goes for US dollar-denominated loans, he said. If an opportunity for another merger and acquisition arises, the company would not have problem with funding.
He said the company has US$1.8 to $1.9 billion in liquidity and an operating cashflow of $1.1 billion.
He played down the impact from the China-US trade war, saying IVL has facilities in both countries.
He said the global economic slowdown expected next year will not affect the company’s performance, pointing to the need for drinking water contained in plastic bottles made of polyethylene terephthalate (PET).
However, he is concerned about the bad publicity for plastic.
The company has tried to promote the recycling and reuse of PET bottles, he said. Authorities in Europe and the US allow private firms to recycle PET bottle for food packaging, but Thailand has yet to follow the lead, Agarwal said.
IVL announced earnings of $7.95 billion for the first nine months of the year, mainly due to diversification of product portfolio and the strengthening of its polyester value chain as well as high-value-added business.
Indorama Ventures’ global expansion continued over the period with acquisitions in the US, Brazil, Egypt, Portugal, Israel and the Czech Republic.
Meanwhile, the company’s CEO Aloke Lohia, expressed confidence in the outlook for next year. “We are well-positioned to benefit from margins and volume expansion in 2018 and 2019, thanks to the company’s unique, global portfolio of assets across the value chain,” he said.
IVL foresees continuous demand for chemicals in line with the economic expansion in many countries.
The company’s core earnings before interest, tax, depreciation and amortisation is expected to increase to $1.75 billion next year, an increase of 74 per cent from 2017, according to a company statement.