Ercros obtains a profit of EUR 36.35 million, 6.5% more than in the first nine months of the previous year

The profit of Ercros in the first nine months of the year was EUR 36.35 million, 6.5% higher than in the same period of 2017. And the gross operating result ("ebitda") was EUR 55.05 million, in line with the same period of 2017.

These results have occurred in a context of rising prices of the company's main raw materials and energy, with electricity at the top of the list, which, although it has been possible to compensate with the high selling prices of the final products, has prevented to consolidate the improvement in profitability experienced in the first half of the year. During last September the prices of raw materials and electricity reached their maximum level. In October, however, a reduction process began that is bringing the prices of the main inputs closer to last year's levels.

Sales for the first nine months amounted to EUR 490.91 million and exceeded almost 1% those reached in the same period of 2017. Corrected by the currency effect, sales increased by 2%, supported in particular for the high prices of caustic soda and chlorine derivatives (sodium hypochlorite and hydrochloric acid).

The decrease in the supply item by 17.1%, despite the substantial increase in the price of electricity in the last three months (18% compared to the third quarter of the previous year), is a consequence of the reduction in electricity consumption derived from the higher energy efficiency of the new facilities and the lower temporary production of chlorine-caustic soda. To this higher electrical cost has been added the reduction in revenues for the interruptibility service recorded under the heading "Provision of services", which has experienced a decrease of 30.8%. Procurement, meanwhile, has reached EUR 248.44 million, representing an increase of 6.6%. This increase is due both to the increase in the cost of raw materials (mainly methanol and ethylene) and to the greater volume of purchases of EDC and VCM, the intermediate products used in the manufacture of PVC. Personnel expenses decreased by 8%, mainly due to the reduction in the workforce as a result of the chlorine business restructuring. The expense item also includes precautionary provisions for a variety of concepts, amounting EUR 6.20 million. As a whole, the expenses of Ercros in the first nine months of 2018 have experienced a contraction of 0.5%, similar to the 0.6% experienced by the revenues, which explains the maintenance of the ebitda in the area of the EUR 55 million.

Amortization has increased by 3.2% due to the investments made, while financial expenses have decreased by 15.8%, mainly due to the lower costs associated with the debt.

After the income from corporate tax of EUR 0.31 million, the profit for the first nine months of the year is EUR 36.35 million, 2.21 million more than in the same period of 2017.

At balance sheet shall be highlighted an increase in net equity of EUR 19.06 million after discounting from the profit of the period the amount destined to the purchase of treasury shares (EUR 11.55 million), to the payment of the dividend (EUR 5.37 million) and the payment of the attendance bonus to the shareholders' meeting (EUR 0.38 million). The net financial debt, amounting to EUR 101.26 million, has increased by EUR 12 million due to the investments implemented in the period and the increase in working capital.

At the end of September 2018, Ercros meets the three conditions established for the shareholders' remuneration: BPA –benefit of the last 12 months/number of shares– amounts to EUR 0.42 (must be at least EUR 0.10); the solvency ratio –net financial debt/ebitda for the last 12 months– stood at 1.37 (must be less than or equal to 2); and the leverage ratio –net financial debt/total equity– stood at 0.38 (must be less than or equal to 0.5).

The third quarter of 2018 has been a period of particularly high costs, but we do not foresee that this episode will substantially alter the favourable expectations of the company's future. The gradual implementation, between the end of 2018 and the middle of 2019, of the capacity expansions of the chlorine–caustic soda and polyols production plants will allow us to increase the production volume and the sales of a range of products whose markets are experiencing a moment of special strength, caused fundamentally by a clear supply deficit regarding to the existing demand.

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