EVC posts Eur 9m loss despite sales margins improving

European polyvinyl chloride manufacturer EVC has posted a third quarter pre-tax loss of €9m despite improved sales margins.

The Netherlands-based company placed most of the blame for its weak performance on a prolonged plant outage during the summer. The company encountered serious problems restarting its vinyl chloride monomer (VCM) plant at Runcorn in the UK after its six-week planned shutdown in June and July.

In the end, Runcorn was out for nearly 13 weeks, not returning to full capacity until the second week in September. There was also an unplanned two-week shutdown in August at EVC’s plant at Porto Marghera, Italy.

The outages cost EVC about 47 000 tonne in lost production, representing lost sales of around €45m. Combined with the associated increase in maintenance costs, the incidents slashed €8m off Ebitda for the quarter, said EVC chief executive Calum MacLean. The quarter’s pre-tax loss was 41% higher than the deficit recorded in July to September 2003, and turnover was up 19% to €287m.

EVC’s improved sales came mostly from price increases, with headline prices for suspension PVC in the first three quarters of 2004 on average 24% ahead of 2003 levels. Volumes in the compounds and films segment were also higher, said EVC.

Looking forward, MacLean said the PVC market in the fourth quarter was ‘significantly improved’ with an ‘optimistic trend’ in demand and prices. He noted that all EVC’s plants were running at full ­capacity with low inventories, and said margins over raw material costs had shown a strong recovery in the past one or two months.

Downstream film and compound businesses, however, were still having a difficult time as PVC prices continued to rise, MacLean said. Meanwhile, higher prices and output of polyvinyl chloride (PVC) helped Norsk Hydro’s polymers business to make a third quarter operating profit of NKr117m (€14.3m/$17.8m) compared with a NKr73m loss in July to September last year.

An insurance-related payment of NKr42m connected with an explosion last year at its Stenungsund site in Sweden, plus improved results from Hydro’s investment in the Qatar Vinyl Company, also contributed to the dramatic turnaround in fortunes.