- IVL full year sales volumes grew 18% to 14.08 million tons
- IVL full year Core EBITDA declined 3% to US$1.11B
- IVL full year operating cash flows grew 6% to US$1.39B
- Total capex of US$2.6B in 2020 including Spindletop (IVOX), funded via US$0.7B from operating cash flow and US$1.9B from new debt
“The biggest learning for us from 2020 is that we have built a portfolio of three strong segments that provides us with diversified sources of earnings with integration and resilience, and primed for growth. We emerged from the year with no structural damage to the end markets that we serve. Safety and hygiene remain key characteristics to our offerings and the pandemic has only further proven the sustainability of our products. In 2020, we launched the company on a journey of transformation, emboldening our leaders with the right tools, and strengthening us from within with systems that will carry us forward. With this we prepare ourselves for the next chapter in our story, towards an enhanced IVL that is resilient, agile, and innovative,” Mr. Aloke Lohia, Group CEO of Indorama Ventures said in a statement after the report of IVL earnings.
Platform, People, Systems
2020 stress tested IVL’s businesses, proving that we have created a portfolio that is resilient, sustainable and positioned for growth. Management team used 2020 to “prepare for growth” by re-organizing the business, building strong leadership teams at every vertical. Additionally, IVL is undergoing various transformative initiatives, on the company’s journey towards establishing institutional excellence and efficiency. The cornerstone for operational excellence lies in the successful implementation of companywide one ERP, i.e. S4 HANA, of which we are progressing well on track.
Execution of the company’s cost saving and business transformation project, named “Project Olympus”, is off to a strong start as IVL is ahead of first year plan by 21%+ in cost savings. Encouraged by internal assessment and outperformance, we have increased IVL’s Project Olympus ambition to deliver US$610M extra EBITDA on an annual basis by 2023 over 2019 (vs. US$352M announced last year), comprising 2,400+ Cost Transformation and Business Full Potential initiatives.
With a liquidity of US$2.6B in Dec20 and operating cash flow of US$1.39B in 2020, IVL is well positioned. On a pro-forma basis, IVL operating debt improved at the end of 2020 over 2019, IVL’s interest rates decreased and we have locked in 70% of debts at these historical low rates. We anticipate to use IVL’s free cash flow of 2021 into strategic projects (including recycling growth), pay down debts, improve shareholder’s returns and IVL ROCE.
With 123 operating sites in 33 countries we are well positioned to reap the benefits from consumption recovery in 2021 in all three segments and the various businesses therein. With the rollout of vaccines and easing of COVID restrictions, we expect a rebound in polyester fiber demand, consequently improving PX, PTA and MEG demand and spreads, as well as demand for IVL’s Lifestyle Fibers. Increased mobility is expected to improve demand for Mobility Fibers, while higher gasoline demand is expected to improve MTBE spread. The rising crude oil price has provided a nice boost to MEG spreads, as well as to MTBE, with IVL’s shale gas advantage. Demand for the company’s PET, Hygiene Fibers, and HVA IOD portfolios are expected to remain robust.