loss after tax of Rs433 million as against profit after tax of Rs123 million in the comparable period.
The loss per share stood at Re0.65 for the first half 2015 as compared to a profit per share of Re0.19 in the same period of 2014.
The company, in its report, said higher sales volume could not be translated into higher earnings in the first half 2015 due to lower international PVC – ethylene core delta, higher domestic energy prices, duty impact on raw material and high cost raw material inventory carried from the last year.
International PVC prices increased during the second quarter of 2015, but, rise in ethylene prices was far more substantial, which shrank the PVC-ethylene core delta.
The unusual rise in ethylene prices was due to supply tightness resulting from regional ethylene cracker turnarounds that kept the PVC margins suppressed throughout the quarter.
Consistent and good PVC domestic demand continued in the second quarter 2015 as international PVC prices remained stable and customers did not encounter international PVC price volatility whereas caustic margins remained under pressure.
High energy prices in domestic market adversely affected margins of all products of the company, the report said.
It said PVC domestic sales rose 27 percent in the first half to 30 June. EPCL sold 80 kilo tons of PVC in the first six months compared to 63 kilo tons in the corresponding period last year. PVC production grew 16 percent to 79 kilo tons in Jan-June 2015 from 68 kilo tons in the same period 2014.
The company produced 80 kilo tons of VCM in the first half to meet its requirements of PVC raw material.
Caustic soda market remained stable during the first half and the company sold 46 kilo tons of caustic soda in the local market, similar to the last year.
The company produced 52 kilo tons of caustic soda during the first half 2015 compared to 56 kilo tons in the same period last year mainly due to operational issues experienced at the Chlor Alkali plant.
Five percent import duty on ethylene and EDC pushed up raw material cost and marred the company’s financial performance.
The import duty on ethylene was cut to two percent in the budget for the current fiscal year of 2015/16, which is expected to support the PVC margins during the third quarter this year.
The company expects local demand for PVC to remain strong and that of caustic to be stable.
As regional ethylene plant turnaround season comes to an end, ethylene prices are expected to decline, which will improve international PVC – ethylene core delta.