Several projects that Alpek had been developing for some time came on stream in 2014. Others still in progress showed significant advancement in the year. The above following a cost cutting strategy in a context of volatile feedstock prices, exacerbated by the sharp decline in oil prices, which had a marked impact on the polyester business.
The cogeneration facility at Cosoleacaque, Veracruz started up in December. With an investment of U.S. $137 million, the plant can produce 95 MW of electricity. Steam and some of the power will be consumed by Alpek, and the excess power will be sold out to third parties. This facility will produce estimated savings of U.S. $40 million per year.
The caprolactam plant in Guanajuato, Mexico underwent an important technology upgrade. It will improve raw materials consumption and streamline the production process, which will result in savings estimated at U.S. $8 million per year.
PET Plant, Bay St. Louis, Miss., U.S.
Gruppo M&G’s PTA/PET plant being built in Corpus Christi, Texas, progressed according to plan. Alpek shares the investment in this facility in exchange for 40% of its estimated one million tons of PET production. Another event during 2014 was the signing of a tolling agreement with Huntsman Petrochemical, regarding 150,000 tons per year of MEG at a price based on ethylene economics.
In order to strengthen operations at the PET plant in Argentina, and to develop the capacity to integrate recycled raw material into virgin PET resins, Alpek acquired CabelmaPET, S.A., the only company that produces recycled food grade PET resins in that country. Besides improving customer process efficiency, the use of recycled PET helps preserve the environment.
In its Plastics and Chemicals business, Alpek signed an agreement to acquire BASF's EPS business in the Americas, including its stake in Polioles’ EPS business in Mexico. This makes Alpek the largest producer of EPS in the region. In turn, BASF will acquire Polioles’ polyurethane business.
Toward the end of the year, Alpek approved the construction of a second cogeneration plant, to be built in Altamira, Tamaulipas. This facility will have an estimated capacity of 300 MW. Construction will begin in 2015.
Alpek's financial results in 2014 showed the impact of the difficult business environment the company faced, particularly in the polyester chain. Although sales volume rose 1%, revenue came to U.S. $6,471 million, 8% lower than the previous year. EBITDA was U.S. $434 million, a decline of 24% compared to 2013. The main factor affecting results was the decline in oil prices, since it provoked a softening of prices and margins along the petrochemical chains. Furthermore, as the price of oil-based feedstock declined, Alpek had to record a non-cash charge of U.S. $71 million due to inventory devaluation.
In 2015, Alpek will receive the full benefit of the projects that started at the end of 2014, like the savings produced by the cogeneration plant and the upgrade of technology at the caprolactam facility, as well as the integration of the EPS business acquired from BASF. The company has the financial condition required to continue to develop other strategic projects, like the second cogeneration plant, the investment in the Corpus Christi facility and the tolling agreement with Huntsman.