Mexican PVC and specialty chemicals maker Mexichem SAB de CV will record a 17 percent increase in dollar sales in the first quarter of 2009, compared to the same period in 2008.
Enrique Ortega, the company's investment relations director, told Plastics News in a recent telephone interview that although the demand for PVC pipe is flat in Mexico, in Brazil and most other South American countries it has grown.
We have the advantage of geographical location and what we are seeing is that in the first quarter we will see an increase in EBITDA [earnings before interest, taxes, depreciation and amortization] in dollar terms of 17 percent, he said. If we do this in pesos, it will be 30 percent.
Overall, he said, the demand for PVC pipe is practically the same as in the first quarter of 2008, although the prices are coming down.
Mexichem released a statement in October saying it would be unaffected by the slide in the value of the Mexican peso against the dollar, as all of its sales are negotiated in dollars. The peso since August has lost about 30 percent of its value against the dollar.
Ortega said the company may issue peso bonds in the second quarter as a means of funding future acquisitions.
The markets are practically closed to these bonds and so we are waiting for a better moment. At this moment, we are not issuing any bonds. We think that it could be in the second quarter [of 2009], he said.
Ortega said that any further acquisitions are on hold.
He told Plastics News last fall that the company, which launched a $1 billion acquisition and expansion spree across the Americas 18 months ago, had spent $410 million up to that time.
Mexichem in February reported preliminary sales for 2008 of 31 billion pesos (US$2.2 billion) to the Mexican Stock Exchange.