Orbia Advance Corporation, S.A.B. de C.V. (BMV: ORBIA) Announces Second Quarter 2024 Financial Results*
Orbia Advance Corporation, S.A.B. de C.V. (“Orbia” or “the Company”) today reported its unaudited financial results for the second quarter of 2024.
For Q2 2024, Orbia achieved revenues of $2.0 billion and EBITDA of $334 million. This EBITDA figure includes $13 million in non-operating charges and represents a $110 million decrease from the previous year’s strong result of $444 million. The decline in EBITDA is attributed to weakened demand and pricing conditions in several markets, notably in parts of Europe. Key contributors to the lower EBITDA include Connectivity Solutions and Fluor & Energy Materials, which had performed well in the same quarter last year. Additionally, temporary water challenges in Mexico affected the Polymer Solutions business group. Despite these challenges, Orbia is focused on improving operational efficiency and is poised to benefit from an eventual market recovery.
Q2 2024 Financial Highlights
- Net Revenues: $2.0 billion, a 9% decrease compared to Q2 2023, driven by lower sales in Connectivity Solutions, Building & Infrastructure, and Fluor & Energy Materials.
- EBITDA: $334 million, down 25% year-over-year, primarily due to declines in Connectivity Solutions and Fluor & Energy Materials.
- Operating Cash Flow: $4 million, a decrease of $212 million, driven by lower EBITDA and cash usage for working capital.
Sameer Bharadwaj, CEO of Orbia, commented, “Our second-quarter results reflect significant sequential improvement across all business groups, demonstrating Orbia’s resilience amidst ongoing market challenges in certain regions. We remain cautiously optimistic about continued improvements in business conditions for the remainder of the year. Our focus on cash generation, commercial and financial discipline, and operational efficiencies positions us well for future growth. We are confident in our ability to achieve our long-term strategic goals and create sustainable shareholder value.”
The revenue decrease was primarily due to an unfavorable mix and lower pricing in Connectivity Solutions, reduced resin prices in Building & Infrastructure, and decreased volumes of high-value refrigerants in Fluor & Energy Materials. Despite these declines, all business units, except Connectivity Solutions, saw year-over-year volume increases.
Cost and Expense Details
- Cost of Goods Sold: $1,474 million, a 4% decrease driven by lower raw material and operating costs.
- Selling, General, and Administrative Expenses (SG&A): $329 million, down 4% but increased as a percentage of sales to 16.6% (an increase of 94 basis points).
- Cost Reduction: The Company has reduced manufacturing and SG&A costs by $35 million year-to-date through business optimization.
Additional Financial Metrics
- EBITDA Margin: 16.9%, a decrease of 352 basis points due to lower revenues and an unfavorable product mix.
- Financial Costs: $35 million, down $97 million from the previous year, largely due to foreign exchange impacts from the depreciation of the Mexican Peso, partially offset by reduced interest income and higher interest expenses.
- Income Tax Benefit: $85 million, with an effective tax rate of negative 61%, compared to 80% in the prior year. Excluding the impact of the Peso depreciation, the effective tax rate was 22%.
- Net Income to Majority Shareholders: $195 million, an increase of $187 million from the previous year, driven by lower income tax and financial costs.
- Operating Cash Flow: $4 million, down $212 million, and free cash flow was negative $130 million, down $160 million due to lower EBITDA and increased working capital investment.
Debt and Liquidity
- Net Debt: $3,838 million, including total debt of $4,635 million and cash and cash equivalents of $797 million.
- Net Debt-to-EBITDA Ratio: Increased from 2.96x to 3.39x compared to the previous quarter, due to reduced cash balance and lower trailing 12-month EBITDA.
