PET maker Indorama Ventures plc says it is adopting a new business strategy to adapt to "unprecedented industry conditions," although full details of what changes it may take will not be announced until March 5.
The Thailand-based chemical producer will announce the "IVL 2.0" strategy during its annual Capital Markets Day in Bangkok.
“In 2023, we recognized that the ecosystem has changed, and what worked for us in the past will not work going forward,” Indorama Ventures CEO Aloke Lohia said in a statement. “We had to devise a new strategy to operate successfully within the new ground rules, leveraging the highly successful global model we built over decades. In recent months, each of our businesses has undergone a stringent review, with detailed plans now in place to optimize our assets, processes and our organization, and focus on enhancing earnings quality over the next three years.”
The company saw a 53 percent decline in earnings in 2023 to an EBIDA of $1.12 billion. Its revenue declined 17 percent year-on-year to $15.6 billion and its net operating debt to equity increased to 1.13 times. The significant downturn was influenced by "industry mega-trends," Lohia said in the March 4 statement, such as the war in Ukraine, inflationary pressures, high interest rates and sluggish economic growth in Europe and China.
Lohia said subdued local demand in China is driving overcapacity and fueling cheap exports, while low feedstock prices in North America are adding to supply due to increased competitiveness. He added that feedstock prices in Western markets will increase over time as peak oil demand draws closer and refineries shut down, whilst the reverse will occur in emerging Asian markets as capacity rises, driving feedstock costs lower.