Indorama Ventures Public Company Limited (IVL), a global sustainable chemical producer, reported a slight rise in quarterly performance, supported by a gradual recovery in sales volumes and as management executes the company’s IVL 2.0 strategy to optimize its manufacturing model, reduce costs, and enhance competitiveness.

The company reported 3 per cent increase in sales volume QoQ and 1% YoY to 3.64MT. Adjusted EBITDA of $370M, a rise of 1% QoQ and a decline of 11% YoY and Operating cash flows of $494M, a rise of 168% QoQ and -1% YoY.

Indorama Ventures’ reported Adjusted EBITDA of $370 million in 2Q24, a 1% rise QoQ and a decline of 11% YoY. The company’s sales volumes increased 1% YoY due to subdued economic activity, but also signaling the end of a prolonged period of destocking that began in late 2022. Operating rates for the group increased from 74% to 76% in 1H24, although still at lower-than-average levels, signifying the weak global economic conditions. On a proforma basis, considering asset optimization actions, operating rates increase to 81%.

The Indovinya segment posted a robust performance on improved margins and rebounding demand for its high-value-add downstream products. The packaging business, newly renamed ‘Indovida’, also performed well due to its leading footprint in emerging markets.

Looking ahead, Indorama Ventures is encouraged by the gradual improvement in the operating environment as customer inventory levels normalize, which is expected to spur further growth in volumes across all segments in 2H24. The company also expects to benefit in 2H24 from its shale gas advantage in the U.S, reflected in ethylene crack margins, positively impacting its integrated MEG business. Continued higher import prices in Western markets will enhance the company’s competitiveness as a leading local operator.

While the polyester industry manages the downcycle, Indorama Ventures’ experienced management team is working hard to deleverage and optimize the business under the company’s IVL 2.0 strategy to emerge stronger and drive enhanced earnings quality in an era of higher interest rates and a substantially changed industry landscape.

The company is making substantial progress with IVL 2.0. In 2Q24, it recorded an impairment and expense provision of $666 million ($543 million is non-cash) under its asset optimization program to improve manufacturing efficiency and reduce fixed costs. The cost benefits will start from 3Q24 and amount to about $170 million in savings in 2025. The company expects that the remaining asset optimizations will not have material impairments.

Management is continuing its intense focus on managing costs and extracting efficiencies, including its Olympus 2.0 program. These efforts achieved $47 million in savings in 1H24 ($29 million in 2Q24). The company is continually optimizing its capital expenditure, with capex supporting investments in sustainability—such as recycling in India—and automation and digital technology, as well as ongoing projects.

A key part of Indorama Ventures’ transformation journey is the implementation of new digital and AI tools to drive operational excellence in key areas, including manufacturing, commercial, procurement, sales, supply chain, and finance excellence. A significant portion of operations now have the new SAP S/4HANA ERP platform as a digital core, while rollouts of other world-leading solutions are ongoing in a phased approach through to 2026.

Aloke Lohia, Group CEO of Indorama Ventures, said, “We remain cautiously optimistic as we see gradual improvements in our industry operating environment, albeit with significant challenges still working their way through the cycle. In the last six months we have made pivotal changes to our organization, including enhancing our leadership teams and empowering them to drive the significant initiatives under our IVL 2.0 strategy. The objectives of IVL 2.0 are clearly mandated and will not only help us manage the current downturn but also position Indorama Ventures for the new era of sustainable long-term growth ahead.”