Ercros obtains a benefit of 10.5 million for the 2019 first half

In line with the guidance disclosed on 2019-12-06 for the first half of 2019, Ercros has reached an ebitda of EUR 29.7 million and a net profit of EUR 10.5 million. These figures are lower than those obtained in the same period of 2018 (35.7% and 62.7%, respectively), however, we must note that in the first half of 2018, results were particularly high.

Profit declined due to the downward trend of the cycle in the chlorine-alkali sector, which began in mid-2018. Sales were up reaching EUR 345,446 thousand, 3.2% higher than in the same period of 2018, due to higher volumes after the addition of new capacity in chlorine and caustic soda, PVC, polyols and synthesis and fermentation of pharmaceutical products despite falling sales prices.

It is difficult to provide a year-end forecast because of the ongoing uncertainties, which are at the heart of the downward trend of the cycle experienced by the industrial sector and, therefore, the chemical industry. These include: the trade dispute between the US and China; Brexit and its effect on the European economy; the tensions between the US and Iran and its upward pressure on the price of oil; and the US's decision to increase tariffs on EU goods, particularly those related to the automotive industry, which has a particular impact on German economy and, as a result, on the rest of Europe.

Nonetheless, we would also like point out some positive signs of recovery as the drop in the price of caustic soda is easing, while main raw material prices are falling, like EDC, and electricity, at least in Q3 2019. Furthermore, over the second half of the year, the last two capacity increases will enter into operation -the electrolysis plant and the tablets for treating swimming pools water plant- and the new volumes will contribute to improve margins.

Any case, we anticipate that for seasonal reasons, the results for the second half of 2019 (which include the months of August and December) will foreseeably be lower than those of the first half of 2019, but we expect Q4 2019 to be stronger than Q4 2018.

Income statements for the 2019 and 2018 first halfs