ACRA expert: 'The petrochemical industry emerged from the pandemic failure at the end of 2020'
Kazanorgsintez presented its financial statements for the first half of 2021
The situation is favourable for the development of the industry in the global and Russian petrochemical markets. It was possible to level the economic situation ahead of the forecast deadlines, and already at the beginning of 2021 experts began talking about a steady growth that resumed after the pandemic failure. Kazanorgsintez PJSC (part of TAIF Group) announced its financial statements for the first 6 months of 2021. The company was able to increase its net profit by 3,6 times compared to the same period in 2020.
Petrochemical market: situation is favourable
Back in the middle of last year, 2020, experts agreed that the global crisis associated with the global epidemic of the new coronavirus infection would have a long-lasting impact on the situation in various markets, including the petrochemical one. Cautious forecasts promised a gradual recovery in production and demand, with a return to pre-crisis levels no earlier than 2023. The reality turned out to be less depressing.
“We can say that the industry came out of the failure already at the end of 2020, and according to the results of the first quarter of 2021, it moved to sustainable growth," Vasily Tanurkov, the director of Corporate Ratings of ACRA (Analytical Credit Rating Agency, — editor's note), expressed confidence in a comment to Realnoe Vremya.
The ACRA expert notes that the situation on the global petrochemical market is highly favourable.
“Prices for standard thermoplastics, according to the price index calculated by Plastinfo, on average increased in ruble terms in the first quarter of 2021 compared to the fourth quarter of 2020 by 27,8%. The price growth continued in the second quarter, and in April-May, the prices increased by another 26,1% compared to the first quarter of 2021. In annual comparison, the price growth is even more impressive — for example, prices in April-May 2021 were higher than the average prices for the second quarter of 2020 by 98,3%.
Aleksey Kalachev, an analyst at Finam Financial Group, agrees with this assessment. He notes that in comparison with the global petrochemical industry in Russia, even at the peak moments of the COVID-19 pandemic, the industry showed growth.
“By the results of 2020, the production of ethylene in the country increased by 40,9%, ethylene polymers in primary forms — by 45,2%, including polyethylene — by 76,1%. The production of propylene increased by 16,3%, and propylene polymers in primary forms — by 36,1%. The production of synthetic rubber in primary forms, despite the difficulties in the tyre industry in the first half of the year, according to the results of 2020, did not decrease, but even added 0,5%," he notes.
The fall in polymer prices in the first half of 2020 hit the companies that actively invested in the modernisation and expansion of production facilities, which purchased imported equipment for foreign currency loans. However, the stabilisation of the national currency exchange rate in the second half of last year and its strengthening in the second quarter of 2021, as well as the recovery in the same periods, and then the rise in polymer prices, allowed companies to avoid significant negative consequences.
“According to data for January-April 2021, compared to the same period in 2020, the production of ethylene in Russia increased by 3,9%, polyethylene — by 5,7%. The production of propylene increased by 32,5%, polypropylene — by 8,5%. Plastics in primary forms were produced by 8,1% more, synthetic rubbers — by 15,4%, and various formaldehyde resins — by 20,3%," the analyst of Finam cited the figures.
Kazanorgsintez: dynamics is positive
The revenue of Kazanorgsintez, by the results of the first half of 2021, exceeded 52,6 billion rubles, which is by 21,3 billion more than in the same period of 2020. Gross profit amounted to more than 22,5 billion rubles, which is almost three times higher than in the first half of 2020 (7 billion 870 million rubles).
Net profit for the period from January to June of this year reached 14 billion 695 million rubles, against 4 billion 52 million in the first half of 2020. The volume of income tax deductions to budgets of all levels also increased more than three times.
The non-current assets of Kazanorgsintez PJSC in comparison with the picture at the end of December 2020 increased by more than 6 billion and reached the amount of 61 billion 364 million rubles. Positive dynamics is also observed with current assets. This indicator had added almost 10 billion by December of last year and reached the level of 82,8 billion rubles.