Petkim posted TL1,529mn net income in 4Q21, in line with our estimate of TL1,520mn and consensus estimate of TL1,508mn. The positive impact of higher than expected net other income offset the negative impact of lower than expected EBIT and higher than expected taxes and financial expenses in 4Q21.
The company posted TL1,692mn EBITDA in 4Q21, slightly lower than our estimate of TL1,740mn and lower than consensus estimate of TL1,797mn. The company’s EBITDA/ton declined to US$217 in 4Q21 (ATA Est: US$237) from US$243 in 3Q21 due to higher feedstock prices. Please note that the company recorded US$13.4mn inventory gain in 4Q21 (3Q21: US$13.1mn).
Petkim will hold a conference call today at 16.00 Istanbul time.
Higher than expected revenues. Petkim’s revenues increased by 134% y/y to TL9,550mn in 4Q21 (ATA Est: TL9,219mn) boosted by 58% higher average sales prices and appreciation of US$ against to TL by 42% y/y in 4Q21. Supported by the uninterrupted feedstock procurement from STAR Refinery, the company generated 838K gross production in 4Q21, resulting in CUR of 98% in 4Q21 (ATA Est.: 100%, 4Q20: 99%). The company’s total sales volume of 695K tons was 6% higher than our estimate of 656K due to higher than expected trading sales volume in 4Q21.
Negative outlook for core spread. Ethylene prices increased by 4% q/q to US$1,246/ton in 4Q21 while naphtha prices increased by 9% q/q to US$719 in the same period. Thus ethylene-naphtha spread declined by 3% q/q to US$527/ton in 4Q21. So far in 1Q22 the spread averaged at US$534/ton compared to our estimate of US$540/ton in our model. Due to increasing feedstock cost, since 17 Dec’21 the spread declined to US$357/ton, implying US$346/ton decrease as of 25 Feb 2022. If the spread remains at the recent level of US$357/ton, we foresee a downside risk to our 2022 estimates.
Net debt increased to TL8.39bn in 4Q21 from TL4.65bn in 3Q21. The company’s net debt / EBITDA ratio increased to 1.4x in 4Q21 from 0.9x in 3Q21. The company’s capex was TL505mn in 4Q21.