Alpek Hits Record Low as Asia Supply Cuts Polyester Margins

Alpek SAB, Mexico’s biggest publicly-traded chemical company by revenue, fell the most on record after missing earnings estimates on weaker-than-expected margins on polyester, its biggest product.

The shares fell 9.2 percent to a record-low 23.93 pesos at the close of trading in Mexico City, the steepest drop since its April 2012 initial public offering. The stock was the worst performer on Mexico’s benchmark IPC index, which fell 0.9 percent. Alpek’s parent company, Alfa SAB, sank the second-most on the IPC, losing 6.7 percent, the most since September 2011.

Alpek, which got about 78 percent of total revenue in 2012 from polyester, said yesterday in a statement that margins on sales of the material were squeezed in the fourth quarter by overcapacity in Asia and “volatility of prices of raw materials.” The San Pedro Garza Garcia-based company had $132 million of earnings before interest, taxes depreciation and amortization, below the $137.6 million average estimate of four analysts in a Bloomberg survey.

“The current oversupply situation in Asia on the polyester chain will not change in the next two years and will keep the company’s growth under potential,” Credit Suisse Group AG analysts led by Vanessa Quiroga wrote today in a note to clients. Credit Suisse cut its recommendation on the stock to the equivalent of sell from hold.

Total sales fell 4 percent to 20.9 billion pesos, Alpek said. Polyester sales fell 9 percent from a year earlier.

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