Methanex(MEOH)2024-03-08 22:24Financial Performance - Revenue for 2023 was $3,723 million, a decrease from $4,311 million in 2022[17] - Net income attributable to Methanex shareholders in 2023 was $174 million, down from $354 million in 2022[17] - Adjusted EBITDA for 2023 was $622 million, compared to $932 million in 2022[17] - Methanex generated $622 million in adjusted EBITDA and $2.25 in adjusted net income per share in 2023[30] - Adjusted EBITDA for 2023 was $622 million, a decrease of $310 million compared to $932 million in 2022[96][103] - Net income attributable to Methanex shareholders for 2023 was $174 million ($2.57 per share), down from $354 million ($4.86 per share) in 2022[95] - Revenue for 2023 was $3.7 billion, a decrease from $4.3 billion in 2022, primarily due to lower average realized prices[99] - Average realized price for methanol in 2023 was $333 per tonne, down from $397 per tonne in 2022, decreasing Adjusted EBITDA by $657 million[101][105] - Methanol sales volume (excluding commission sales) increased to 10.0 million tonnes in 2023 from 9.8 million tonnes in 2022, increasing Adjusted EBITDA by $16 million[106] - Total cash costs increased Adjusted EBITDA by $331 million in 2023 compared to 2022, driven by lower Methanex-produced methanol costs ($199 million) and purchased methanol costs ($207 million)[111] - Methanex-produced methanol costs decreased by $199 million in 2023 due to changes in realized methanol prices, spot gas prices, and inventory timing[112] - The proportion of Methanex-produced methanol sales increased in 2023, decreasing costs and increasing Adjusted EBITDA by $18 million[113] - Purchased methanol costs decreased by $207 million in 2023 due to lower methanol prices and timing of inventory flows[114] - Logistics costs increased by $18 million in 2023 compared to 2022, primarily due to production mix and longer supply routes, impacting Adjusted EBITDA[115] - The Egypt gas redirection and sale proceeds contributed $58 million to Adjusted EBITDA in 2022, which did not recur in 2023[116] - Other costs increased by $17 million in 2023 compared to 2022, mainly due to the start-up costs of the Geismar 3 plant[117] - The mark-to-market impact of share-based compensation was $16 million in 2023, compared to $171 million in 2022, driven by changes in the company's share price[119][124] - Depreciation and amortization increased to $392 million in 2023 from $372 million in 2022, driven by higher costs of depreciable assets and ocean-going vessel additions[125] - Finance costs decreased to $117 million in 2023 from $131 million in 2022, primarily due to higher capitalized interest related to the Geismar 3 project[126] - Finance income and other increased to $40 million in 2023 from $25 million in 2022, primarily due to higher interest income[127] - The effective tax rate based on Adjusted net income was 23% in 2023, compared to 29% in 2022, reflecting changes in earnings distribution and foreign exchange impacts[130] - Cash flows from operating activities decreased to $660 million in 2023 from $987 million in 2022, primarily due to lower earnings and changes in non-cash working capital[133] - Net income before income tax was $286 million in 2023, compared to $582 million in 2022, with an income tax expense of $2 million in 2023 and $120 million in 2022[128] - Non-cash working capital changes decreased cash flows from operating activities by $59 million in 2023, compared to an increase of $54 million in 2022[135] - Trade and other receivables increased by $33 million in 2023, reducing operating cash flows due to timing of invoices and payments[135] - Inventories decreased, increasing operating cash flows by $16 million in 2023 due to lower methanol prices impacting natural gas costs[135] - Accounts payable and accrued liabilities decreased by $23 million in 2023, reducing operating cash flows due to lower gas and methanol prices[135] - The company repurchased 1,894,711 common shares for $86 million in 2023, compared to 5,551,751 shares for $253 million in 2022[136] - Total dividend payments in 2023 were $49 million, with quarterly dividends increasing from $0.175 to $0.185 per share in April 2023[136] - Capital expenditures for consolidated operations were $178 million in 2023, primarily for planned turnarounds in Geismar, New Zealand, and Chile[139] - The Geismar 3 project incurred $270 million in capital expenditures in 2023, with total capital costs expected to not exceed $1.3 billion[139][151] - Total liquidity decreased to $758 million in 2023 from $1.458 billion in 2022, with cash and cash equivalents at $458 million[141] - The company plans to repay a $300 million bond due at the end of 2024, prioritizing excess cash for this repayment[140] - The company's financial assets measured at fair value decreased from $323 million in 2022 to $121 million in 2023, primarily due to a decline in derivative instruments designated as cash flow hedges[169] - Cash and cash equivalents decreased significantly from $858 million in 2022 to $458 million in 2023[169] - Total financial liabilities increased from $3,715 million in 2022 to $3,806 million in 2023, driven by higher trade payables and lease obligations[169] - As of December 31, 2023, the company had a cash balance of $458 million and an undrawn $300 million revolving credit facility expiring in July 2026[196] - Long-term debt obligations include $1,986 million in unsecured notes and $156 million related to limited recourse debt for ocean-going vessels[197] - The company faces liquidity risks, with no assurance of sufficient funding for future capital projects without incurring additional debt[200] Production and Sales - Total sales volume in 2023 was 11,169 thousand tonnes, up from 10,774 thousand tonnes in 2022[17] - Methanex produced 6.6 million tonnes of methanol in 2023, an increase of approximately 0.5 million tonnes compared to 2022[26] - Methanex's average realized methanol price in 2023 was $333 per tonne, compared to $397 per tonne in 2022[61] - Methanex's total annual operating capacity, including interests in jointly owned plants, is currently 9.3 million tonnes[48] - Methanex's 2023 sales volume of 11.2 million tonnes of methanol represented approximately 12% of global methanol demand[64] - In 2023, the company produced 6,642 thousand tonnes of methanol, an increase from 6,118 thousand tonnes in 2022, with total sales volume reaching 11,169 thousand tonnes[80] - The Geismar plants in the United States produced 2.1 million tonnes of methanol in 2023, up from 2.0 million tonnes in 2022, due to an unplanned outage in late 2022[84] - New Zealand production increased to 1.4 million tonnes in 2023 from 1.2 million tonnes in 2022, but 2024 production is estimated to be lower at 1.0 - 1.1 million tonnes due to natural gas supply constraints[85][86] - The Atlas facility in Trinidad produced 1.1 million tonnes of methanol in 2023, up from 1.0 million tonnes in 2022, with plans to idle the facility in September 2024 and restart the Titan plant[87] - Chile production increased to 1.0 million tonnes in 2023 from 0.9 million tonnes in 2022, with 2024 production estimated at 1.1 - 1.2 million tonnes, supported by natural gas supply from Argentina[88] - Egypt production reached 1.0 million tonnes in 2023 (Methanex share of 0.5 million), up from 0.8 million tonnes in 2022 (Methanex share of 0.4 million), despite an unplanned outage in mid-October[89] - The company owns 63.1% of the Atlas methanol facility and 50% of the Egypt methanol facility, with the remaining shares marketed through commission agreements[93][94] - The company owns 63.1% of the Atlas methanol facility, which is accounted for as an equity investment[173] Market and Demand - Global methanol demand increased to approximately 91 million tonnes in 2023, driven primarily by growth in China[51] - Methanex expects methanol demand growth rates in 2024 to be similar to 2023, with the market relatively balanced[31] - Methanol demand in China includes approximately 30,000 taxis and methanol hybrid passenger cars and 4,000 heavy-duty trucks running on M100 fuel, representing approximately one million tonnes of annual methanol demand[55] - Methanol demand in China for cleaner fuels in industrial boilers, kilns, and cooking stoves represents approximately seven million tonnes of methanol demand[56] - Methanol demand is driven by global economic growth, industrial production, energy prices, and government regulations, with over 30% of global demand coming from energy-related applications[176][177] - In 2023, approximately 2-3 million tonnes of new methanol production capacity was added in China, while a new plant in Iran faced operational challenges due to sanctions and technical issues[183] - The company faces risks related to global trade, including potential increases in import duties and restrictions on methanol exports to key markets like China, which accounts for 60% of global methanol demand[192] Capital Projects and Investments - The Geismar 3 plant, with a capacity of 1.8 million tonnes, is expected to reach commercial production in 2024[23] - Methanex secured a two-year natural gas agreement in Trinidad and Tobago to restart the Titan methanol plant in September 2024[27] - Methanex expects its new 1.8 million tonne Geismar 3 facility in Louisiana to reach commercial production in 2024[59] - Methanex has marketing rights for 100% of the production from jointly-owned plants in Trinidad and Tobago and Egypt, providing an additional 1.3 million tonnes per year of methanol offtake supply[49] - The company maintains a strong liquidity position with $458 million in cash and $300 million of undrawn backup liquidity, enabling full funding of the Geismar 3 project with cash on hand[75] - The company expects its new 1.8 million tonne Geismar 3 facility in Louisiana to reach commercial production in 2024, contributing to increased supply[184] Risk Management - Methanex's enterprise risk management program has been further matured in 2023, with greater emphasis on explicit risk management discussions and analyses[38] - Methanex's Board and senior management have integrated risk management discussions into the corporate strategy process, aiming for enhanced assessment of material risks and a more comprehensive discussion of risk appetite[38] - The company is exposed to macroeconomic risks, including potential impacts from pandemics, global economic downturns, and inflationary pressures, which could negatively affect methanol demand and prices[185][187] - The company operates in multiple jurisdictions, exposing it to risks such as expropriation, political instability, and changes in laws or policies that could adversely affect its operations[189] - Methanol produced in sanctioned countries may create competitive price pressure, potentially impacting the company's operations and financial condition[193] - The company is subject to taxation risks in multiple jurisdictions, with potential adverse impacts from new taxes or rate increases[194] - Foreign operations are organized based on tax law assumptions, but changes in foreign tax laws could lead to adverse financial consequences[195] - Foreign currency risk is significant, with exposure to fluctuations in currencies such as the Canadian dollar, Chinese yuan, and euro, impacting costs and revenues[201] Operational Costs and Efficiency - The company's production facilities outside North America are supported by natural gas purchase agreements linked to methanol prices, ensuring competitiveness throughout the methanol price cycle[69] - In North America, the company has fixed price contracts and hedges targeting a minimum operating rate of approximately 70% in the near term, with remaining gas requirements purchased through the spot market[70] - Distribution costs, including ocean shipping, in-market storage, and distribution, are a significant component of total operating costs, with efforts focused on cost reduction through optimized shipping fleet use and geographic product exchanges[71]