MercoPress. South Atlantic News Agency

ANCAP's Carboclor sinks deeper, goes after sale or merger

: Things going from bad to worse for ANCAP's Carboclor in Argentina

Losses increase from US $ 9 million by mid year to US $ 14 million in September due to contraction of domestic demand, the fall in international prices and the percentage of ethanol cut in gasolines.Carboclor, ANCAP's subsidiary in Argentina, shows no sign of recovery in its most recent balancesheet as production fell below “normal levels” caused by financial shortcomings which in turn led to a decrease in the inflow of raw materials to the refinery in Campana in the province of Buenos Aires. Shutting down the plant for 25 days is being considered as a partial solution.

 The company's report also specifies that a ruling by the Argentine Ministry Energy and Mining regarding the composition of naphthas, “continues to have a strong impact” on the margin of profitability of the company's business, which makes and “greater and better term financing” necessary. One of Carboclor's main products was a high octane component for the production of naphtha without lead contaminant, but its commercialization was banned at the beginning of this year due to the new regulations.

Between July and September, the gross margin of the business, from sales of own production products, resale and service rendering reached 11%, a result far below the 17% registered in the same period of the previous year.

Meanwhile, total revenues from sales of products and provision of services amounted to US $ 43.9, of which US $ 32.3 million from the domestic market and US $ 11.6 million to regional markets. Everything indicates that the petrochemical company will complete its fourth consecutive year with negative results.

A consultancy service retained by ANCAP is about to produce a report, based upon which ANCAP the Uruguayan company is expected to reach a decision on the proposals received by those interested in either a buyover or a merger.

So far, the company's worst performance since it began operating in 2003 was recorded last year, with a negative result of US $ 7.4 million. Carboclor's stock peaked at 4.69 Argentine pesos at the end of October and was worth 3.68 pesos at the close last week. The value of the shares continues to be well above what was observed in June, before the possibility of sale was known, when it stood at 1.76 pesos.

The company based in Campana (province of Buenos Aires) is owned by 75% by Ancsol SA (the company that has ANCAP in Argentina) and 25% of the shares belong to investors listed on the Buenos Aires Stock Exchange.

According to Carboclor's balance report, the company “maintains the expectation of an internal market with some improvement activity and possibilities of a moderate increase in regional markets. In this context, the different areas of society continue to work on variable and fixed cost efficiency with the goal to achieve better results and increase the competitiveness of their products in the different markets in which they intervene.”