Duisburg (Germany) (pta034/29.11.2018/16:09) - The international chemicals group PCC SE closed Q3 2018 with sales and earnings having risen double digits on the prior-year period. The PCC Group with its more than 3,400 employees and operations in 18 countries thus took a further significant stride forward in its pursuit of growth. "Group-wide, we also succeeded once again in the third quarter in exceeding the already good sales and earnings performance of the two preceding quarters," comments Ulrike Warnecke, Managing Director of the Duisburg-based Group holding company PCC SE. "Despite the continuing political uncertainties and smoldering international trade conflicts, the business environment remained robust. In addition, the usual decline in sales anticipated during summer vacation months failed to materialize at all in 2018." The Chemicals division, by far the largest in the Group, exceeded sales expectations thanks to higher volumes in some cases, and generally to the continuing relatively high prices for chemical commodities.
At EUR 203.3 million in the third quarter, quarterly consolidated sales exceeded the EUR 200 million threshold for the first time in the current year. As a result, the nine-month figure rose to EUR 590.7 million, an increase of 16.4% year on year. "This is all the more pleasing," says Warnecke, "because at the end of the third quarter of 2018 we had a shortfall of around EUR 40 million in expected sales due to the delayed start-up of our new production plant for silicon metal in Iceland." In the meantime, both electric arc furnaces of the plant are up and running normally. "We were able to close the revenue gap thanks to sales in a number of areas exceeding our expectations," explains Warnecke. "This was particularly the case in the segments Chlorine and Surfactants and also the business units Commodity Trading and Intermodal Transport. "
On the earnings side, too, most of the Group companies of PCC SE achieved a plus in the third quarter of 2018. Group earnings before interest and other financial items, taxes, depreciation and amortization (EBITDA) amounted to EUR 25.8 million for the third quarter, with the cumulative nine-month total coming in at EUR 77.6 million. This represents an improvement year on year of 58.9%. Earnings before taxes (EBT) rose as of September 30 to EUR 29.5 million from just under EUR 1 million in the previous year.
Highlights from the Chemicals Division
With its five segments Polyols, Surfactants, Chlorine, Specialty Chemicals and Consumer Products making it by far the largest contributor to PCC's sales and earnings, the Chemicals division generated total revenues of EUR 175.3 million in the third quarter of 2018. For the nine months to September 30, divisional sales amounted to EUR 509.2 million. This represents an increase of 16.3% year on year, with sales thus also coming in higher than expected. The previous year's figures and targets were also exceeded on the earnings side.
In the Polyols segment, PCC Rokita SA (Brzeg Dolny), the largest member company of the PCC Group, achieved a positive quarterly result, despite operating in a difficult market environment. PCC Rokita SA is Eastern Europe's leading producer of polyols, the starting material for polyurethane foams. As in previous quarters, however, demand for cold-cured foam mattresses declined. PCC Rokita SA therefore concentrated in particular on higher-margin specialty products.
The Surfactants segment closed the third quarter very successfully and significantly up on the previous year. The largest subsidiary in this segment, PCC Exol SA (Brzeg Dolny), saw both sales and earnings increase.
The Chlorine segment continued its positive business development in the third quarter of 2018 and was also the main contributor to earnings in the PCC Group. The Chlorine business unit of PCC Rokita SA benefited in particular from rising prices for the chlorine by-product sodium hydroxide. The new MCAA business unit also exceeded sales expectations. The production plant for ultra-pure monochloroacetic acid (MCAA) went into operation in 2016 as the only one of its kind in Eastern Europe. In the meantime it has acquired a market share of 20% in Europe.
The Specialty Chemicals segment also closed the third quarter of 2018 with a positive result exceeding expectations. As of September 30, sales rose by 12.5% year on year to EUR 169.2 million.
The main reason for this again lay in the development of sales in the trading business led by Duisburg-based PCC Trade & Services GmbH, which benefited in particular from the relatively high average price level for chemical commodities. The Polish chemical companies in the Specialty Chemicals segment, including alkylphenol producer PCC Synteza S.A., also closed the third quarter of 2018 in positive territory and up on the previous year.
However, the Q3 sales and earnings performance of the Consumer Products segment remained below expectations. A restructuring process was therefore initiated for the largest company in the segment, PCC Consumer Products Kosmet Sp. z o.o. in Poland.
Silicon metal production plant in Iceland about to commence regular operations
Within the Silicon Metal business unit, the new production plant in Húsavík, Iceland, is about to go into full production. Both its electric arc furnaces are now operating at normal load. The plant of the Icelandic subsidiary PCC BakkiSilicon hf is one of the most advanced and environmentally compatible of its kind in the world. With its high electricity requirement, the silicon metal production facility is supplied exclusively from renewable energy sources, in particular geothermal generating plant. With an investment volume of around EUR 265 million, it is the largest single project in PCC's 25-year history to date. Including a delay of six months, the construction period for the plant with its annual capacity of 32,000 metric tons amounted to around three years. The commissioning phase began on April 30 this year with ignition of the first of the two electric arc furnaces. The official start of production then occurred with the first tapping of liquid silicon metal on May 11, 2018, and on August 31, 2018, the second furnace was started up. The plant obtains its key charge material for silicon metal production from PCC's own quartzite quarry in Poland.
Group segments Logistics, Energy and Holding/Projects
At EUR 23.4 million in the third quarter, the Logistics segment achieved its highest quarterly sales figure in the current fiscal year to date. As of the end of September 2018, segment and divisional sales amounted to EUR 64.9 million, an increase of 18.3% over the previous year. By far the largest part of this growth was again attributable to the container logistics company PCC Intermodal S.A., which benefited in particular from increasing capacity utilization of its trains on Polish routes. And now PCC Intermodal S.A. also regularly handles container deliveries by train from China traveling through to Germany.
The Holding/Projects segment's activities include the management and control of projects such as that involving construction of the silicon metal plant in Iceland. Another major project in this Group segment relates to the construction of a plant for the production of aerosol-grade dimethyl ether (DME). This plant is being built in a joint venture in Russia and is scheduled to start operations by the beginning of December 2018.
PCC's Energy segment generated net external sales of EUR 2.6 million in the third quarter of 2018.The main source of sales is the Conventional Energies business unit, which among other things supplies PCC's chemical plants in Poland. The Renewable Energies business unit operates small hydropower plants in Southeastern Europe and, thanks to favorable hydrological conditions, it was able to close the third quarter positively with results better than expected overall.
PCC Group Quarterly Report 3/2018 download:
About PCC - https://www.pcc.eu
PCC is an international chemicals group that is also active in the logistics and energy sectors. The PCC Group is managed by the holding company, PCC SE, headquartered in Duisburg, Germany. Established 25 years ago in October 1993 and now boasting more than 3,400 employees in 18 countries, the PCC Group generated consolidated sales of EUR 683.2 million in 2017, and a total of EUR 590.7 million in the first nine months to September 30, 2018. The majority of these revenues, around 85%, is generated by the five segments of PCC's Chemicals division: Polyols, Surfactants, Chlorine, Specialty Chemicals and Consumer Products, operating mainly at sites in Central and Eastern Europe, and primarily in Poland. Group capital expenditures amounted to EUR 101.4 million in 2017, with a further spend of EUR 128.4 million in the first nine months to 30 September 2018.
The largest Group company is PCC Rokita SA, which operates one of Poland's biggest chemical plants near Wroclaw. Among other things, it is a major chlorine manufacturer and Eastern Europe's leading producer of polyols. PCC Exol SA is one of Poland's biggest surfactant producers. In the Logistics segment, PCC container transport services connect international destinations, and within the Energy segment, PCC operates a number of modern power plants. Under the Holding/Projects segment, PCC is currently putting a silicon metal plant into service in Iceland.(end)
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