TLALNEPANTLA DE BAZ, Mexico--(BUSINESS WIRE)--Mexichem, S.A.B. de C.V. (BMV: MEXCHEM*) (“The Company” or “Mexichem”) announced today that the Board of Directors of its joint venture, Petroquímica Mexicana de Vinilo S.A. of C.V. (PMV), a co-investment with PPQ Cadena Productiva S.L.,subsidiary of Pemex Etileno (PPQC), and of Mexichem’s Vinyl Business Group, has decided not to rebuild its Vinyl Monochloride (VCM) production capacity. Therefore, the joint venture’s VCM production, and the assets and liabilities associated with ethylene production and auxiliary services associated with VCM and ethylene will be classified as discontinued operations in Mexichem’s financial statements for the years 2015, 2016 and 2017. The discontinued operation will not have an impact in PMV’s cash balance or cash flow (See Annex 1). It is important to mention that Mexichem, PPQC and Pemex Etileno will continue to evaluate the possibility of investing in the future, jointly or separately, through PMV or another vehicle, in businesses related to the existing ones or in other types of businesses.
It is publicly known that on April 20, 2016 there was an explosion in the VCM plant of the Pajaritos Petrochemical Complex where two of the three plants are located, the VCM plant and the ethylene plant; as well as auxiliary services, such as energy generation and production, steam sales and water treatment. The VCM plant (Clorados III) was the one damaged. The chlorine and caustic soda production plant is located at a separate site.
This represents the exit of PMV from the VCM and ethylene businesses in Mexico, but not the chlorine-soda business, whose plant will continue to be operated by PMV, and therefore the alliance between the PPQC subsidiary of PEMEX Ethylene and Mexichem will remain in place.
PMV's decision to exit the VCM and Ethylene businesses does not impact Mexichem’s guidance for EBITDA growth for 2017, which is expected to be between 20% and 25% above the $884 million reported in 2016.
ANNEX 1
THE FINANCIAL FIGURES PRESENTED BELOW ARE NOT AUDITED.
mm US$ | January - September | ||||||||||||||||||
INCOME STATEMENT |
2017 |
Discontinued |
2017 continued |
2016 |
Discontinued |
2016 continued |
|||||||||||||
Net Sales | 4,363 | 3 | 4,360 | 4,072 | 35 | 4,037 | |||||||||||||
Cost of Sales | 3,316 | 27 | 3,289 | 3,094 | 48 | 3,046 | |||||||||||||
Gross Profit | 1,047 | (24 | ) | 1,071 | 978 | (13 | ) | 991 | |||||||||||
Operating Expenses | 499 | (25 | ) | 524 | 580 | 56 | 524 | ||||||||||||
Operating income | 548 | 1 | 547 | 398 | (69 | ) | 467 | ||||||||||||
Financial cost | 163 | 1 | 162 | 135 | - | 135 | |||||||||||||
Equity income of associated entities | (1 | ) | - | (1 | ) | (3 | ) | - | (3 | ) | |||||||||
Income from continued operations before income tax | 386 | - | 386 | 266 | (69 | ) | 335 | ||||||||||||
Cash tax | 104 | 104 | 128 | - | 128 | ||||||||||||||
Deferred tax |
47 | (8 | ) | 55 | (35 | ) | 4 | (39 | ) | ||||||||||
Income tax | 151 | (8 | ) | 159 | 93 | 4 | 89 | ||||||||||||
Income from continued operations | 235 | 8 | 227 | 174 | (73 | ) | 101 | ||||||||||||
Discontinued operations | 1 | 180 | (179 | ) | (10 | ) | 274 | (284 | ) | ||||||||||
Net consolidated Income (Loss) | 236 | 188 | 48 | 164 | 201 | (183 | ) | ||||||||||||
Minority Interest | 56 | 83 | (27 | ) | (27 | ) | 89 | (116 | ) | ||||||||||
Net Majority Income (Loss) | 180 | 105 | 75 | 191 | 112 | (67 | ) | ||||||||||||
EBITDA | 838 | 8 | 830 | 643 | (55 | ) | 698 | ||||||||||||
mm US$ | as of November 2017 | |||||||
Balance Sheet |
2017 |
Discontinued |
2017 |
|||||
Current assets | 3,029 | - | 3,029 | |||||
Non-current assets | 5,759 | (198 | ) | 5,561 | ||||
Total Assets | 8,788 | (198 | ) | 8,590 | ||||
Current liabilities | 2,079 | - | 2,079 | |||||
Non-current liabilities | 2,863 | (10 | ) | 2,853 | ||||
Total liabilities | 4,942 | (10 | ) | 4,932 | ||||
Consolidated shareholders equity | 2,150 | (105 | ) | 2,045 | ||||
Minority shareholders equity | 1,696 | (83 | ) | 1,613 | ||||
Total equity | 3,846 | (188 | ) | 3,658 | ||||
Total liabilities and equity | 8,788 | (198 | ) | 8,590 | ||||
ABOUT MEXICHEM
Mexichem is a global leader in plastic piping, one of the most cost-efficient PVC producer and one of the world’s largest chemical and petrochemical companies. Mexichem contributes to global development by delivering an extended portfolio of products to high growth sectors such as infrastructure, housing, Datacom, water management, among others. With operations in over 30 countries, Mexichem’s global footprint includes more than 18,000 employees, 120 plants, 2 fluorite mines, 15 R&D laboratories and 8 training academies. Mexichem has annual revenues of US$5.4 billion, it has over 50 years of history and more than 30 years trading on the Mexican Stock Exchange. The company is member of the Mexican Stock Exchange Sustainability Index and the sustainability emerging markets index FTSE4Good.
Forward-looking Statements
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 final results may be materially different from current expectations due to several factors, which include, but are not limited to, global and local changes in politics, the economy, business, competition, market and regulatory factors, cyclical trends in relevant sectors; as well as other factors that are highlighted under the title “Risk Factors” on the annual report submitted by Mexichem to the Mexican National Banking and Securities Commission (CNBV). The forward-looking statements included herein represent Mexichem’s views as of the date of this press release. Mexichem undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law.”
Mexichem has implemented a new Code of Ethics that rules its relationships with its employees, clients, suppliers and general groups. Mexichem’s Code of Ethics is available for consulting in the following link: http://www.mexichem.com/Codigo_de_etica.html. Additionally, Mexichem Audit Committee established a mechanism of contact, which allows that any person that knows the unfulfillment of operational and accounting records guidelines and lack of internal controls of the Code of Ethics, from the Company itself or from the subsidiaries that this controls, file a complaint which is anonymously guaranteed. The whistleblower program is facilitated by a third party. The telephone number in Mexico is 01-800-062-12-03. The website is http://www.ethic-line.com/mexichem and contact e-mail is mexichem@ethic-line.com. Mexichem’s Audit Committee will be notified of all complaints for immediate investigation.