This article first appeared on GuruFocus.
Release Date: October 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Alpek SA (ALPKF) reported a 10% sequential improvement in financial and operating results compared to the previous quarter.
The polyester segment showed a better product mix and steady volume levels, contributing to a 24% increase in comparable EBITDA quarter-on-quarter.
Operating free cash flow increased by 41% from the previous quarter, totaling $123 million year-to-date.
The company successfully refinanced $690 million, improving average debt maturity to 4.6 years.
Alpek SA (ALPKF) is progressing with the potential divestiture of non-core assets to maximize shareholder value.
Total volume decreased by 8% on a yearly basis due to persistent market oversupply, particularly in the polyester segment.
The company reported a $21 million negative adjustment due to extraordinary costs from permanent closures of certain sites.
Asian integrated PET reference margins declined by 10% from the previous quarter, and Chinese PET margins decreased by 14%.
Net debt increased to $1.8 billion, resulting in a net debt to EBITDA ratio of 4.0 times, higher than the previous quarter.
Alpek SA (ALPKF) revised its full-year comparable EBITDA guidance to approximately $500 million due to ongoing market challenges.
Q: With the US government removing PET from the tariff exemption list, have you noticed any impact yet in new contracts or spot sales? Is it possible to see the effect flowing into 4Q results already? Also, what trends have you observed in demand and volume so far in October, and what are your expectations for 2026? A: (Jorge Young, CEO) We expect to see the impact of the reciprocal tariffs more into 2026. There are some small positive reactions in the fourth quarter, but the most relevance will happen in 2026 as contracts renew. Imports have been heavy throughout the first nine months of the year, so the market needs time to absorb that. In the fourth quarter, we have low seasonality, which has been more acute in recent years, compounded by heavy import levels earlier in the year.
Q: Can you rank your key chemicals, PET, PP, EPS, etc., in terms of through-cycle return on invested capital and free cash flow conversion? A: (Jorge Young, CEO) Generally, our plastics and chemicals, polypropylene, and EPS are more efficient in return of capital throughout the cycle. They have more elements for differentiation and less exposure to other markets, with most of our footprint in North America. However, the polyester segment still has opportunities to improve its technologies and costs.
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Q: Regarding the guidance revision, is the downward revision mainly attributed to lower volumes? Also, can you provide any update on the PET market dynamics and potential shutdowns? A: (Jorge Young, CEO) In the fourth quarter, while there is a small uptake in reference margins, they remain low. Ocean freights have come down, and demand was somewhat below expectations. Heavy imports from Asia earlier in the year also pressured the third quarter. As for PET market dynamics, several plants in Asia and Europe are under pressure, but no specific shutdown announcements can be confirmed at this time.
Q: Does your $500 million guidance assume benefits from the new reciprocal tariffs, or is that an upside risk? How are contract negotiations evolving? A: (Jorge Young, CEO) The guidance factors in everything we know, but the market needs time to digest the large level of imports from the first nine months. The effects of the tariffs are relatively small and already factored in. Negotiations are just beginning, and we will provide more quantitative updates at the beginning of the year.
Q: Could you provide an update on current investment plans and the potential impact of leverage increasing to 4 times EBITDA? Do you maintain the 2.5 times target, and when do you expect to reach this goal? A: (Jose Carlos Fonz, CFO) We are exploring the sale of non-strategic assets, which could contribute $30 to $50 million. Our target remains 2.5 times leverage, and we expect to be closer to this by the end of 2026. We will evaluate the potential for dividend payments in the second half of the year, depending on the environment and performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.