) adjusted earnings (excluding one-time items other than
stock-based compensation expenses) of 56 cents per share for the
fourth quarter of 2012 missed the Zacks Consensus Estimate of 58
cents, reflecting a negative surprise of around 3.5%.
On a reported basis, the company posted a loss of $1.49 per
share in the reported quarter compared with earnings of 68 cents
a share a year ago. The bottom line was hurt by a hefty asset
impairment charge (of roughly $297 million).
For the full year, adjusted earnings were $1.77 per share,
trailing the Zacks Consensus Estimate of $1.83. On a reported
basis, Methanex recorded a loss of 73 cents a share for the year
versus earnings of $2.06 per share a year ago.
Revenues remained flat year over year at $695.7 million,
missing the Zacks Consensus Estimate of $708 million. Sales
volumes in the quarter totaled 1,899,000 tons, down 0.3% from the
Average realized price per ton amounted to $389 in the
quarter, compared with $388 a year ago. Total production in the
quarter was 1,067,000 tons compared with 961,000 tons in the
prior-year quarter. Sales of Methanex-produced methanol were
1,059,000 tons versus 1,052,000 tons a year ago.
For the full year, revenues totaled $2672.9 million, down 2.5%
year over year, missing the Zacks Consensus Estimate of $2,678
In the reported quarter, the company produced 59,000 tons in
Chile, operating one plant at approximately 20% capacity, versus
113,000 tons in the prior-year quarter. The gas supply outlook in
Chile is challenging and the company announced that it will idle
its Chile operations in March 2013 due to the lack of natural gas
feedstock. Metahnex is continuing to work with Empresa Nacional
del Petroleo (ENAP) and others to secure sufficient natural gas
to sustain its operations.
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 378,000 tons in the quarter, much higher than
211,000 tons produced last year. The company is assessing the
possibility of restarting its nearby Waitara Valley plant which
could add up to a further 900,000 tons of annual production in
Methanex owns two facilities in Trinidad. The company's Titan
facility, in which it holds full ownership, produced 189,000 tons
in the fourth quarter, lower than 180,000 tons produced last
year, mainly due to periodic natural gas curtailments.
The Atlas facility, in which the company holds a 63.1%
interest, produced 180,000 tons in the quarter, higher than
195,000 tons produced last year. The company 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 short term.
The facility produced 129,000 tons in the quarter, down from
132,000 tons it produced a year ago. The decline in production
was a result of planned maintenance disruptions and natural gas
The company faced periodic natural gas shortages in this
region as well due to increased electricity demand and seasonal
domestic demand for natural gas electricity generation. Methanex
has a 60% interest in the Egyptian facility.
The facility produced 132,000 tons in the quarter, down from
130,000 tons produced last year. Methanex is currently
de-bottlenecking the facility, a move which can 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 declined 38%
to $98 million in the fourth quarter from $158 million in the
prior-year quarter. The company ended the year with a strong
liquidity position with cash and cash equivalents of $745.6
million, up 112.6% year over year. Long-term debt as of December
31, 2012, was $1,191.9 million, compared with $652.1 million as
of December 31, 2011.
The company paid quarterly dividend of 18.5 cents per share to
its shareholders in the fourth quarter for a total of $17
Methanex feels 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.
The company stated that methanol price will depend on a number
of factors such as economic health, operating rates, global
energy prices and demand. The company 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.
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 by nearly 3
million tons over the next few years, which in turn, will
contribute to cash generation and increased supply to
Methanex, retains a short-term (1 to 3 months) Zacks Rank #5
Other companies in the chemical industry with favorable Zacks
Air Products and Chemicals
). While Arkem is carrying a Zacks Rank #1 (Strong Buy), both
BASF and Air Products hold a Zacks Rank #2 (Buy).
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METHANEX CORP (MEOH): Free Stock Analysis
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