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Despite the third consecutive year of record production Methanex revenue decreased by 27%

Source: Benjah-bmm27, Public Domain

Methanex Corporation was incorporated in 1968 and is a Canadian company, the world’s largest producer and supplier of methanol to the major international markets in Asia Pacific, North America, Europe and South America. The total annual production capacity of the сompany, including Methanex interests in jointly owned plants, is currently 9.2 million tonnes and is located in New Zealand, the United States, Trinidad, Chile, Egypt, and Canada. In addition to producing methanol, the company purchases methanol from third parties. This gives the company flexibility in managing its supply chain to meet customer needs.

Global methanol demand totalled approximately 84 million tonnes in 2019 and represented a 3% increase compared to 2018.

Methanex’s average realized price in 2019 was $295 per tonne, compared to $405 per tonne in 2018. The decline in methanol pricing resulted from relatively strong industry operating rates for most of the year combined with modest methanol demand growth.

According to the company´s Annual Financial Report, Methanex achieved a third consecutive year of record production in 2019 with 7.6 million tonnes, despite an unplanned outage experienced at the Egypt facility from April to August 2019. In Egypt, the company produced 0.4 million tonnes of methanol in 2019, compared to 0.6 million tonnes in 2018.

In New Zealand, Methanex produced 1.9 million tonnes in 2019, compared with 1.6 million tonnes in 2018.

The facilities in the United States produced 1.9 million tonnes of methanol in 2019, compared to 2.1 million tonnes 2018.

The Trinidad facilities produced a total of 1.7 million tonnes in 2019 and remained unchanged compared to 2018. The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities.

In Canada the production of methanol remained unchanged and amounted to 0.6 million tonnes in 2019.
The Chile facilities produced 1 million tonnes of methanol in 2019 compared to 0.6 million tonnes in 2018. The production increased for 2019 in comparison to 2018 was due to the restart of the company´s Chile IV plant in the fourth quarter of 2018 which had been idle since 2007.

For a number of years Chile operations operated well below full capacity. After signing new gas agreements, the restart of the Chile IV plant in late 2018 returned Chile to a two plant operation at 75% annual operating rates, with further potential to increase production.

Revenue of the company reduced by 27% and amounted to $3.3 billion in 2019, compared to $4.5 billion in 2018. The lower revenue reflects a decrease in the average realized price in 2019 compared to 2018.

The geographic distribution of revenue for 2019 was comparable to 2018 – 30% versus 27% in China, 19% versus 21% in Europe, 18% in the USA, 11% in South Korea, 9% in South America, 4% in Canada and 9% versus 10% in other parts of Asia.

The methanol sales volume, excluding the commission sales volume for the year 2019 increased by 0.1 million tonnes to 10.1 million tonnes from 10.0 million tonnes in 2018. Including the commission sales volume from the Atlas and Egypt facilities, the total methanol sales volume of the company was 11.1 million tonnes in 2019, compared with 11.2 million tonnes in 2018.

In 2019, the company achieved adjusted EBITDA of $566 million and adjusted net income of $71 million, compared with adjusted EBITDA of $1,071 million and adjusted net income of $556 million in 2018. The key drivers of change in adjusted EBITDA are average realized price, sales volume and cash costs. The primary drivers of change in total cash costs are changes in the cost of Methanex-produced methanol and changes in the cost of methanol, which the company purchases from others.

In 2019, the company reported net income attributable to Methanex shareholders of $88 million or $1.01 income per common share on a diluted basis, compared with net income of $569 million or $6.92 income per common share on a diluted basis in 2018.

Cash flows from operating activities for the year 2019 were $515 million, compared with $980 million for the year 2018. The decrease in cash flows from operating activities is primarily due to lower net income resulting from a lower realized methanol price.

Methanex has made significant progress on projects in Louisiana to increase production by approximately 10% at existing Geismar facilities and in 2019 the company reached a final investment decision to construct a new 1.8 million tonne plant which will be Methanex’s third plant in Geismar, Louisiana.