Methanex Reported Mixed Results After Decline in Realization of Methanol Sales from USD 422 To USD 377 In Third Quarter
Methanex Q3, 2022, Outcomes
Adjustable EBITDA of USD 192 million and USD 69 million net income attributable to Methanex shareholders.
Geismar 3 ("G3") project Advancing on time and budget. The primary production of methanol is expected to begin in the fourth quarter of 2023. The rest of the capital accounting for around USD 450 to USD 500 million, is entirely funded using cash.
In July, the quarterly dividend was increased by 20 percent, and approval of a 5 percent share repurchase program was announced in September.
The scheduled turnarounds were successfully completed in New Zealand and Egypt. By the time of the turnaround in Egypt, an agreement was allowed for redirecting and selling the plant's contracted natural gas over the course of three months to use the excess LNG capacity in Egypt for fulfilling Europe's energy demand.
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Through dividends and share repurchases, USD 44 million was returned to shareholders, and they have USD 962 million in cash, making for a strong liquidity position.
In 2022, quarter three, Methanex reported that USD 69 million in net income was attributable to Methanex shareholders (accounting for USD 0.87 net income per common share on a diluted basis) in comparison to quarter two of 2022, USD 125 million in net income (USD 1.41 net income per common share on a diluted basis).
In comparison to the previous quarter, net income was lower mainly because of reasons like a reduced average realized price, a decline in the sales of Methanex-produced methanol due to the planned turnarounds in New Zealand and Egypt along with the mark-to-market impact of share-based compensation as a result of Methanex's share price changes.
In Egypt, this was somewhat offset by the redirection and sale of natural gas. For 2022 quarter three, Adjusted EBITDA was USD 192 million, and Adjusted net income was USD 49 million (USD 0.69 Adjusted net income per common share). Compared to the 2022 Q2, Adjusted EBITDA is USD 243 million, and Adjusted net income is USD 84 million (USD 1.16 Adjusted net income per common share).
Compared to the Q2 2022 average realized price of USD 422 per tonne, the Q3 average realized price was USD 377 per tonne. Methanol prices were mediated from their early year highs. They remained stable by the third quarter due to flat demand paired with reduced industry operating rates caused by turnarounds and planned and unplanned outages that impacted the supply.
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USD 44 million was returned to shareholders using regular dividends and share repurchases, concluding the quarter ended with USD 962 million in cash, or around USD 890 million in cash, including the share of cash in the Atlas joint venture and excluding non-controlling interests. There are also two undrawn credit facilities, a USD 300 million revolving credit facility providing financial flexibility as well as a USD 300 million construction credit facility mainly linked to the Geismar 3 project.
According to Procurement Resource, the article states that Methanex reported a loss compared to the previous quarter due to factors like a reduced average realized price, a decline in the sales of Methanex-produced methanol due to the planned turnarounds in New Zealand and Egypt along with the mark-to-market impact of share-based compensation as a result of Methanex's share price changes.