Tessenderlo Chemie NV (TESB) posted a second-quarter loss on the pending disposal of part of its building profiles unit and announced an agreement with Barrick Gold Corp. (ABX) to expand its thiosulfates business in the U.S.
The net loss of 15.2 million euros ($19.1 million) included a 35.9 million-euro impairment of the Profialis unit to be sold to OpenGate Capital LLC and of a chlorine derivatives plant in China, the Brussels-based company said today in a statement. Earnings before interest, taxes, depreciation, amortization and one-time items of 55.7 million euros beat the 51.4 million-euro average of three analyst estimates compiled by Bloomberg.
The sale of Profialis, which includes two plants in France and Belgium and distribution centers in Hungary and Poland, follows the disposal of Tessenderlo’s PVC and chlor-alkali assets to Ineos Group last year. The Belgian chemicals maker is increasingly focusing on specialty products such as thiosulfate fertilizers, its most profitable business, and gelatine. Its U.S. subsidiary Kerley agreed to build a thiosulfates plant near a Barrick Gold mine, which will supply the mining company with a product substituting cyanide as a leaching agent by the end of next year.
“Quite positive news as it demonstrates the commitment to grow the mining business, which we understand is potentially larger in the long term than the fertilizers,” said Filip De Pauw, an analyst at ING Groep NV in Brussels, who recommends buying the shares. “A solid operational beat on second-quarter numbers, driven again by Kerley.”
Tessenderlo advanced as much as 3.7 percent on Euronext Brussels and traded little changed at 22.56 euros by 12:43 p.m. local time. The shares trimmed earlier gains after Chief Executive Officer Frank Coenen said on a conference call that analyst estimates for the full year are “slightly on the high side.”
Analysts projected Ebitda would decrease about 7 percent to 174.1 million euros this year, according to the average of seven estimates compiled by Bloomberg. Ebitda from continuing operations fell 15 percent in the first half.
The company got half of its Ebitda in the second quarter from Phoenix, Arizona-based Kerley as higher raw-materials costs almost wiped out profit in the businesses making potash fertilizers and feed phosphates.
Kerley’s sales rose 22 percent in dollar terms as U.S. farmers increased purchases of fertilizer anticipating higher prices for their crops. A stronger dollar boosted revenue in euros by 32 percent.
Demand weakened in the second half of June because of drought and Tessenderlo said weather conditions may exacerbate the usual seasonality effect in the second half.
The project for Barrick Gold will require capital spending of about $25 million, with margins similar to the fertilizer business, Coenen said on the call. Full capacity will be reached in about three years and Tessenderlo doesn’t expect to announce additional mining projects “in the next year or two,” he said.
Tessenderlo’s net debt fell to 244.5 million euros at the end of June from 254.9 million euros at the end of March. The figure doesn’t include 91.4 million euros receivables Tessenderlo sold to a factoring company.
Net debt will increase in the second half even as capital spending this year will be about 20 million euros lower than initially planned, Chief Financial Officer Mel de Vogue told analysts on the call.
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