Methanex Corporation
(
MEOH
), the world's largest supplier of methanol, posted earnings of 23
cents per share in the first quarter of 2012 up from 37 cents a
year ago. The results missed the Zacks Consensus Estimate of 36
cents. Earnings were impacted by lower sales of Methanex-produced
methanol.
Revenues of $666 million exceeded the year-ago revenues of $619
million, a roughly 7.6% increase. Sales surpassed the Zacks
Consensus Estimate of $633 million. Sales volumes in the quarter
totaled 1.8 million tons, down 2.2% from the year-ago quarter.
Average realized price per ton amounted to $437 in the quarter
almost flat versus the year ago quarter. Total production in the
quarter amounted to 945 thousand tons compared with 801 thousand
tons in the prior-year quarter.
Production Summary
Chile
: During the reported quarter, the company produced 113 thousand
tons in Chile operating one plant at approximately 40% capacity
versus 183 thousand tons in the prior-year quarter. The company
operated its methanol facilities in Chile, significantly below the
site capacity due to curtailed natural gas supplies from
Argentina.
New Zealand
: During the first quarter of 2012, Methanex produced 174 thousand
tons, down 14.3% from the comparable year-ago quarter. The company
suspended operations in the quarter in New Zealand leading to
reduced production. The company is on schedule to restart a second
plant in New Zealand in the third quarter of 2012, which is
expected to add 650,000 tonnes of incremental capacity per annum to
the New Zealand operations.
Trinidad
: Production grew by 77.7% to 195 thousand tons in the reported
quarter. Among the company's facilities, Atlas operated below its
capacity till January 2012 due to an equipment failure and was also
shut down for this reason. However production resumed the next
month and the plant operated at 90% capacity. The company expects
to continue to face natural gas supply restriction in the near
term. However, currently it is trying to find a solution for this
problem.
Egypt
:
The facility produced 202 thousand tons, significantly above 31
thousand tons that it produced a year ago, and also above its
capacity.
Medicine Hat
:
The facility produced 114 thousand tons in the quarter. The
company has a plan in place to purchase natural gas from the
Alberta gas market and expects the long-term natural gas dynamics
in North America to support the long-term operation of this
facility.
Financial Review
Consolidated cash flows from operating activities in the first
quarter of 2012 were $93 million compared with $125 million as in
the prior-year quarter. Cash and cash equivalents were $584.1
million as of March 31, 2012, compared with 239.8 million as of
March 31, 2011.
Outlook
Methanex expects strong methanol demand and an upward pressure
on prices for the second quarter of 2012. However, the company
believes that methanol price will depend on the strength of the
global economy, industry operating rates, global energy prices, new
supply additions and the strength of global demand.
As part of its strategy to strengthen its position as the global
leader in the production and marketing of methanol, Methanex
intends to continue pursuing new opportunities to boost its
strategic position in the methanol industry.
Methanex, which faces stiff competition from
Celanese Corp.
(
CE
) and
Eastman Chemical Co.
(
EMN
), retains a Zacks #3 Rank, reflecting a short-term (1 to 3 months)
Hold rating. Currently, we have a long-term (more than 6 months)
Outperform recommendation on the stock.
CELANESE CP-A (
CE
): Free Stock Analysis Report
EASTMAN CHEM CO (
EMN
): Free Stock Analysis Report
METHANEX CORP (
MEOH
): Free Stock Analysis Report
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