Indorama Ventures Evolves Its Business Strategy

Indorama Ventures Public Company Limited unveiled its new business strategy and outlined how major structural shifts are re-shaping the chemical industry. Ahead of the company’s annual Capital Markets Day (CMD), Aloke Lohia, group CEO of Indorama Ventures, pointed to industry trends that are creating fundamental long-term changes in global chemical markets.

He described how subdued demand in China is driving overcapacity and fueling cheap exports, while low feedstock prices in North America are adding to supply due to increased competitiveness.

At the same time, unprecedented macroeconomic and geopolitical headwinds are weighing on global consumption, impacting Indorama Ventures’ margins and volumes in FY23, and leading to a 53% decline in earnings.

Lohia said feedstock prices in Western markets will increase over time as peak oil demand draws closer and refineries shut down, while the reverse will occur in emerging Asian markets as capacity rises, driving feedstock costs lower.

At its CMD, the company will outline how it will deleverage its business in a prolonged environment of higher interest rates, while right sizing its operations and optimizing competitiveness.

“Change is a constant in our industry,” Lohia said. “We have embraced similar seismic events in our 30-year history and emerged stronger than before.

“In 2023, we recognized that the ecosystem has changed, and what worked for us in the past will not work going forward. We had to devise a new strategy to operate successfully within the new ground rules, leveraging the highly successful global model we built over decades. In recent months, each of our businesses has undergone a stringent review.”

Measures include a $2.5 billion reduction in net debt to around $4.3 billion in 2026, including generating $0.8 billion in cashflow from operational improvements and a further $1.7 billion from strategic corporate actions including divestments, asset actions, and select business listings. These steps are aimed at reducing its debt to EBITDA ratio to less than 3x.

“Our new strategy is a significant financial pivot,” Lohia said. “Now that we have the scale, we will leverage our global footprint and strong client relationships and optimize our costs so that we can generate enhanced long-term sustainable profit growth.”