) earnings of 63 cents per share for the first quarter of 2013
missed the Zacks Consensus Estimate of 68 cents, reflecting a
negative surprise of around 7.4%. The company posted a profit
(attributable to shareholders) of $60 million in the reported
quarter, up from $22 million recorded a year ago.
Revenues remained flat year over year at $651.9 million,
missing the Zacks Consensus Estimate of $777 million. Sales
volumes in the quarter totaled 1,831,000 tons, up 0.8% from the
Average realized price per ton amounted to $412 in the quarter
compared with $382 a year ago. Total production in the quarter
was 1,057,000 tons compared with 945,000 tons in the prior-year
quarter. Methanex-produced methanol sales volume was 1,024,000
tons versus 926,000 tons a year ago.
Methanex, during the quarter, forged a 10-year supply pact
Chesapeake Energy Corporation
), the second largest natural gas producer in the U.S. Under the
agreement, Chesapeake will supply natural gas for Methanex's
methanol plant in Geismar, La. The supply will begin with the
startup of the 1-million ton plant in late 2014.
The company produced 55,000 tons in Chile in the reported
quarter, operating one plant with roughly 20% capacity, versus
113,000 tons in the prior-year quarter. Methanex produced an
additional 6,000 tons under another natural gas receiving
arrangement from Argentina in the quarter.
The gas supply outlook in Chile is more challenging and
Methanex's decision of idling its Chile operations remains in
place due to the lack of natural gas feedstock. However,
investments for exploration and development of natural gas are
done in the southern Chile plant to keep the plant operating.
Methanex is continuing to work with Empresa Nacional del Petroleo
(ENAP) and others to secure sufficient natural gas to sustain its
The availability of natural gas supply, level of exploration
and development in southern Chile are instrumental in determining
the future of Chile operations.
Methanex produced 309,000 tons in the quarter, much higher than
174,000 tons produced in the same period last year. The company
lost roughly 60,000 tons of production due to an equipment
failure at the Motunui facilities, which resulted in an unplanned
The company is planning to restart its Waitara Valley plant
and de-bottlenecking the Motunui facilities, which could produce
to the site's full capacity of 2.4 million tons annually by the
end of 2013.
Methanex owns two facilities in Trinidad. The company's
fully-owned Titan facility produced 181,000 tons in the first
quarter, lower than 215,000 tons produced in the year-ago
quarter, mainly due to periodic natural gas curtailments and
minor unplanned disruptions.
The Atlas facility, in which the company holds a 63.1%
interest, produced 248,000 tons in the quarter, higher than
127,000 tons produced last year. Methanex is facing natural gas
supply restrictions in Trinidad. Although it is trying to find a
solution to this problem, Methanex expects to experience natural
gas curtailments in the near term.
The facility produced 133,000 tons in the quarter, down from
202,000 tons produced a year ago. The decline in production was a
result of natural gas supply restrictions.
The company faced periodic natural gas shortages in this
region, which are expected to persist in the future due to
increased electricity demand during the summer.
The facility produced 131,000 tons in the quarter, up from
114,000 tons produced last year owing to the age of its catalyst
and the availability of the natural gas feedstock. Methanex is
currently de-bottlenecking the facility to add another 90,000
tons of annual production capacity to Medicine Hat operation by
the end of the third quarter of 2013.
Consolidated cash flows from operating activities increased
59.5% to $118 million in the first quarter from $74 million in
the prior-year quarter. Methanex ended the quarter with a strong
liquidity position with cash and cash equivalents of $726.8
million, up 24.4% year over year. Long-term debt, as of Mar 31,
2013, was $1,146.4 million compared with $881.3 million, as of
Mar 31, 2012.
The Board of Methanex declared a 8% hike in its quarterly
dividend to 20 cents per share, payable on Jun 30 2013, to
shareholders of record as of Jun 16, 2013. This represents the
ninth increase since the initiation of a dividend in 2002.
Methanex believes that the methanol industry and its pricing
environment would appear to be attractive in the longer term as
global demand is expected to surpass new capacity additions.
Methanex stated that methanol price will depend on a number of
factors such as economic health, operating rates, global energy
prices and demand. Methanex believes that its healthy financial
position, strong global supply network and competitive-cost
position will strengthen its position as the global leader in the
methanol industry and enable it to continue to deliver
incremental returns to shareholders.
Methanex further expects to start a 0.7 million ton plant in
Azerbaijan and restart a 0.8 million ton plant in Channelview,
Tex., in 2013. With the continued initiatives to increase
production in New Zealand and progress in the Louisiana project,
the company has the potential to increase its operating capacity
and pursue other strategic growth opportunities over the next few
years, which in turn, will contribute to cash generation and
increased supply to customers.
Methanex retains a Zacks Rank #2 (Buy).
Other companies in the chemical industry that are worth
Shin-Etsu Chemical Co., Ltd.
LyondellBasell Industries NV
). While Shin-Etsu Chemical retains a Zacks Rank #1 (Strong Buy),
LyondellBasell carries a Zacks Rank #2 (Buy).
CHESAPEAKE ENGY (CHK): Free Stock Analysis
LYONDELLBASEL-A (LYB): Free Stock Analysis
METHANEX CORP (MEOH): Free Stock Analysis
SHIN-ETSU CHEM (SHECY): Get Free Report
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