CALGARY, Alberta (Reuters) - Nova Chemicals Corp NCX.TO returned to a fourth-quarter profit as the petrochemical maker reported bigger sales, several one-time gains and a smaller restructuring charge than the year-prior period, it said on Thursday.
The company, Canada’s biggest producer of raw plastics, also said it has little to fear from any economic downturn, as its chief executive predicted that strong demand for the company’s products will continue.
”We have excellent opportunities in just about every important market in the world,“ Jeff Lipton, Nova’s chief executive, said on a conference call. ”
Nova produces a broad range of the plastics used for food wraps, CD cases, plastic bags, electronic components and other items.
The company earned $126 million, or $1.51 a share, in the quarter, reversing a year-earlier loss of $781 million, or $9.46 a share.
The year-earlier loss included a $772 million after-tax charge on the writedown of styrene and polystyrene assets it put into a joint-venture with Britain’s Ineos in an attempt to revive the struggling business.
Nova said the net earnings included $76 million in before-tax restructuring charges, largely to shut down polystyrene facilities in Montreal, and Belpre, Ohio.
Excluding unusual items, earnings nearly tripled to $259 million from $98 million in the fourth quarter of 2006.
Nova, which is based in Canada but has its executive offices in Pittsburgh, Pennsylvania, said the results were driven by its feedstock advantages, efficient plants and new product portfolio.
The biggest gain came from its massive operation at Joffre, Alberta, a complex that accounts for almost two-thirds of Nova’s output of polyethylene, the plastic used for food wraps and soft drinks bottles.
Joffre’s production uses less-costly ethane feedstock from Alberta, giving it an average cost advantage of 27 cents a pound over rivals whose ethane prices are set on the U.S. Gulf Coast.
“Nova’s Alberta advantage in ethylene feedstock costs versus U.S. Gulf producers were at a record high ... in the fourth quarter,” David Silver, an analyst with J.P. Morgan Securities, wrote in a note to clients.
“The most important aspect of our results is the performance of our Alberta-based business,” Lipton said.
The company said it expects demand for its products to remain strong for polyethylene, despite the widespread economic concerns that have roiled stock markets and prompted interest-rate cuts.
“Basic consumption, we think, will be strong and the supply-demand balance globally will be excellent for 2008,” Lipton said. “We feel very positive about 2008, given all the economic uncertainty in the U.S.”
Revenue was $1.79 billion, up about 10 percent from $1.63 billion.
Nova shares, which have dropped 24 percent over the past 12 months, rose C$1.69 to C$28.69 on Thursday on the Toronto Stock Exchange
Reporting by Scott Haggett and Susan Taylor; Editing by Rob Wilson