Indorama posts softer Q3 results amid shifts in global chemical industry

Global chemicals and polymers producer Indorama Ventures Public Co. Ltd. (IVL), Bangkok, has reported a decline in earnings for the third quarter of fiscal year 2025 as chemical manufacturers continue to confront “profound long-term shifts” in the global industry.

The company says management’s decisive “self-help” actions under its far-reaching IVL 2.0 plan are helping to optimize the business to succeed in a substantially reshaped operating environment. It posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $285 million in the third quarter, a 14 percent decline quarter-on-quarter and a 33 percent drop year-on-year. Additionally, the company says sales volumes fell 3 percent over the previous quarter and 9 percent compared to 2024, mainly due to maintenance turnarounds.

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IVL says the global chemical industry is grappling with record overcapacity and subdued demand amid a prolonged period of “unprecedented macroeconomic shifts” marked by geopolitical tension, technological advances, changing consumer behavior and environmental factors that have led to a “new world order for chemical markets.”

In March 2023, Indorama launched its IVL 2.0 plan to address the energy crisis in Europe and pricing disparities between eastern and western polyester feedstock markets that have arisen from electrification. The company says it expects the sector’s earnings in 2025 and 2026 to be weaker, driven by unresolved tariff negotiations and fractured supply chains.

“The margin pressure that the industry is inflicting on itself is unprecedented,” says Aloke Lohia, Group CEO of IVL.  “The corrective action taken by industry players and governments in key chemical markets such as China, South Korea, Brazil and Europe, is underway but needs to gather urgent momentum to restore a healthy balance between supply and demand over the next 12-24 months.

“Hopefully, there is delayed consumption in the same way we saw for travel after the COVID-19 epidemic. Europe in particular has been plagued with structural issues, and an end to the Russia-Ukraine conflict will be the most defining upside trigger for the region, as well as the EU’s discussions on import regulations.”

In a sustained effort to counter the softer operating environment, IVL says its leadership teams are focused on structural actions under IVL 2.0 to optimize the company’s business model, particularly in Europe, which it says has borne the brunt of the industry headwinds. Indorama says these measures include extracting savings, enhanced cash generation, digital adoption and sustainability innovation. In the first nine months of this year, the company reports an operating cash flow of $985 million, with an EBITDA conversion of 121 percent.

The company says site optimization actions, such as the sale of Wellman International in Ireland in the third quarter, helped reduce fixed costs, rationalize capacity and reposition the company’s leaner and more efficient portfolio in the changing landscape. Fixed cost reduction in the last 12 months (LTM) was $130 million compared to the corresponding period in 2023 when IVL 2.0 was launched. The company says it also expects to realize more than $200 million in 2026 from the sale of land and properties of rationalized assets in Australia, the Netherlands and Canada.

“I am proud of our teams in identifying and taking timely, proactive self-help actions, which reflect a methodical approach to financial management and commercial excellence,” Lohia says. “By taking these measures now, we will be better positioned to capitalize when global trade and consumer demand adjust and realign to the emerging new era for our industry.”

Lohia says he believes that over the next 12-24 months a host of mergers and partnerships will take place in the industry, but in the meantime, “we are disciplined with our capital allocation by focusing on partnerships in high-growth projects, which brings expansion in accretive categories. We are at an advanced stage with various collaborations that would enhance our balance sheet and the quality of our earnings across all our business segments.”

Alongside efforts to extract savings and enhance working capital, IVL says it is maintaining a “prudent approach” to capital allocation as net debt remains high relative to EBITDA in an environment of elevated interest rates.

“Valuations are depressed for the industry as a whole,” Lohia says. “A firm’s stock price should reflect management’s readiness to emerge from troughs and adapt to industry shifts. This realignment is being shaped at Indorama Ventures but is not yet being recognized due to our continued high debt relative to EBITDA.”