ALPEK (ALPEKA) Q1 2025 earnings summary

Executive summary

• 1Q25 saw a 7% year-over-year decline in volume to 1.12 million tons, driven by softer demand, global overcapacity, and increased import competition, especially in the polyester segment.

• Comparable EBITDA was $126 million, down 18% year-over-year and 25% sequentially, reflecting margin compression and market volatility.

• Strategic initiatives included asset divestments, value-added product expansion, innovation in energy and biofertilizers, and a disciplined focus on financial flexibility.

• Completed the spinoff and listing of Controladora Alpek on the Mexican Stock Exchange, with plans to merge share structures by end of 2025.

• Board refresh with four new independent directors, increasing board independence to 85%.

Financial highlights

• Revenues were $1.72 billion, down 1% sequentially and 10% year-over-year, mainly due to lower volumes and softer pricing.

• Reported EBITDA was $131 million, including a $15 million inventory adjustment and $10 million in shutdown/reorganization costs.

• Comparable EBITDA was $126 million, down 18% year-over-year and 25% sequentially.

• Operating free cash flow was $8 million for the quarter, improving from negative in prior quarters.

• Net debt stood at $1.89 billion, flat sequentially, up 4% year-over-year; net debt/EBITDA (LTM) at 3.1x.

Outlook and guidance

• Market uncertainty and volatility expected to persist, especially regarding trade, tariffs, and global demand.

• No update to full-year outlook; focus remains on cost structure improvement, asset productivity, and financial flexibility.

• Demand expected to gradually recover in coming quarters; working capital normalization anticipated in the second half.

• Merger with Controladora Alpek targeted for completion by 4Q25, pending regulatory approvals.

• Guidance for Chinese PET margins remains around $160/ton, with recent improvement seen in April.