Alpek, S.A.B. de C.V. (BMV:ALPEK/A) Q1 2022 Earnings Call

0:00 I'd like to remind everyone that today's webcast is being recorded and will be available on our website at alpec.com. I will now turn the call over to Mr. Pepe Valdez.

0:11 Thank you, Alejandro. Good morning, everyone, and thank you for joining us today. This morning, I am very pleased to start by saying that Alpec has kicked off 2022 on an extraordinarily strong note. Subtitles by the Amara.org community Alpex significantly exceeded financial performance expectations for the first quarter. Jose Carlos will review this in greater detail in his presentation.

0:59 Second, we will discuss the progress related to the octal acquisition. Third, we will cover Alpex recent efforts to improve its governance practices. And finally, we will provide revised 2022 guidance for the earnings report released yesterday. Providing some context for the first quarter result, the global economy remains strong as tightness increase in the marine freight industry due to the Russia-Ukraine conflict resulting in higher costs and lower availability for vessels needed to balance worldwide supply chains. In this environment, Asian integrated polyester reference margins average $420 per ton for the quarter, much higher than expected and only 3% lower than the previous quarter, with the spread between Chinese and Asian margins widening to $98 per ton.

2:02 North American polypropylene reference margins also experienced a lower than expected quarterly decline, averaging 38 cents per pound, 20% lower quarter on quarter, but only 5 cents per pound lower than the corresponding figure for December. In North America, EPS margin continued to reflect the strength they gained in the fourth quarter of 2021, declining by 7 cents per pound in the first quarter, but remaining at higher than historical levels. At this point, I would like to turn the call over to Jose Carlos, who will go into more detail regarding the impact of these changes on financial results.

2:44 Thanks, Pepe, and thank you all for being here with us today. I will first like to highlight some of APEC's main achievements during the first quarter. Our overall volume increased to 1.2 million tons on track with guidance. We achieved record quarterly comparable levy that of $333 million with both the polyester and plastic and chemical segments posting their highest figures ever for any quarter. We gave a dividend to shareholders of $176 million, representing a 6.5% dividend yield at the time of payment. And leverage was further reduced to 1.0 times. If we start by taking a deeper look at volume, Alpec reached 1.22 million tons this period, 4% higher than last quarter, as demand for all of our products remained strong.

3:36 In the polyester segment, volume was 3% higher quarter-on-quarter, largely due to strong demand and efficient operation across all of our sites, and a lack of weather-related events, which affected us in 2021. In plastic and chemicals, volume was 6% higher quarter-on-quarter. As polypropylene demand remained strong, and Alpek was able to operate idle EPS reactors throughout scheduled maintenance at our US-based facilities. Moving on to raw material price dynamics, average spot print crude oil price increased to $97 per barrel, 23% higher than in the previous quarter, largely due to the effects of the Russia-Ukraine conflict.

4:21 US reference paraxylene prices increased by 21%. largely in line with the rise in crude oil. And in the plastic and chemicals, propylene prices remain stable, averaging 63 cents per pound, a 4% decrease when compared to the previous quarter. Switching over to EBITDA breakdown for the first quarter, we can see that comparable EBITDA was a record of $333 million and 11% higher quarter on quarter. This was primarily due to better than expected margins for our main products, as well as higher volume across both segments. Reporte de Vida was $456 million, 70% higher quarter on quarter. This result also included a non-cash inventory gain of $63 million and a positive carry forward effect of $66 million.

5:16 In terms of results by key segment, we can see that polyester comparable EBITDA was $193 million, 21% higher quarter on quarter, and 116 higher year on year, making this the strongest quarter ever for the segment. Results largely benefited from the entry of 2021 contracts, as well as the strong Asian polyester reference margins, which remain higher than expected, averaging $420 per ton. In plastics and chemicals, comparable levita was also set a new quarterly record of $142 million, an increase of 3% quarter-on-quarter and 46% year-on-year. This was mainly due to solid EPS margins stemming from a strong demand coupled with the higher import parity prices due to increased marine freight costs, as well as polypropylene margins, which remain higher than expected for this point of the year.

6:18 which with regards to free cash flow generation in the quarter, networking capital investment increased by $193 million, largely due to rising raw material prices during the quarter. CAPEX totaled $40 million and was mainly used for maintenance and minor asset replacements. ALPEC paid a $176 million shareholder dividend as approved during this annual shareholders meeting in March. Free cash flow resulted in $120 million as record EBITDA more than offset the increase in networking capital in the quarter. Finally, I want to discuss the company's financial position during the first quarter. Alpex net debt increased to $1.31 billion.

7:03 Last 12 months EBITDA also increased to $1.28 billion, resulting in an improved leverage ratio of 1.0 times net debt to EBITDA. If considering net debt to comparable EBITDA, we also see that ALPEC also improved this ratio to 1.2 times. That concludes my comments. I will now turn the call back to Pepe. Thank you, Jose Carlos.

7:29 Turning our attention to recent events, per our announcement earlier this year, ALPEC reached an agreement to acquire Octal, a major PET sheet producer. The process has continued moving forward as planned, having already received the majority of necessary approvals from regulatory authorities. This transaction continues to be expected to close by the end of the second quarter of this year. upon closing Albrecht estimates and agree every day effect of $85 million during the second half of 22, which is not included in the guidance figures. As we stated in the past, Alpec strives to maintain world-class governance practices.

8:17 To this point, the company implemented a series of initiatives during its latest annual shareholders' meeting, which included increased disclosure on its proposals to shareholders, such as financial reporting, board composition and fee, as well as dividends. and the addition of a new member to ALPEX Board, which would have increased the share of both independent and female members. On April 18, we were deeply saddened by the passing of Francisco Garza Egloff, a member of ALPEX Board of Directors. We are grateful to him for his valuable contributions to the company. Our thoughts and prayers are with his family and loved ones. As of now, Alpek has no plans to replace his board seat. Finally, regarding our outlook for the remainder of 2022 and based on the stronger than expected margins so far this year for the key products in our portfolio, Alpek has decided to revise its guidance upwards.

9:23 Our new guidance figures are based on the following key market and business assumptions. Average Brent crude oil reference price of $100 per barrel, Asian integrated pet reference margin of $355 per ton, based on higher demand and freight costs, combined with the normalization in the Asia versus North America pet spread mentioned last quarter, as well as a lower decline for North America polypropylene margins, though still expected to close 2022 at original guidance levels. Overall, volume and capex remain unchanged, as both are currently on track with original guidance. Based on these assumptions, guidance for overall compatible EVDA for 2022 is now set at $1.25 billion.

10:20 As always, I would like to thank our team, customers, and suppliers for helping Alpec reach new heights. I would also like to thank you for your attention today. I will now turn the call back to Alejandro to open the webcast for Q&A. Thank you, Pepe. At this time, we will now take your questions. To ask your question live, we ask that you raise your hand virtually through Zoom. We will call on participants in the order that hands are raised. Alternatively, you may also type your question through the Q&A function. We will attempt to cover as many questions as time allows. Our first question comes from Alejandra Obregon with Morgan Stanley. Alejandra, your line has been unmuted. Please go ahead and ask your question.

11:09 Hi, good morning ALPEC team. Congratulations on the amazing numbers and thank you for taking my question. The first one I think has to do with supply demand dynamics. So you have talked about this very tight environment in PET and I guess some of your peers have also spoken about this. So I was hoping to hear more on that. You're very close to capacity in PET. The Americas is a deficit market and apparently global markets are actually very tight as well. So I was just wondering if this is a point where we should be worrying about availability. Could this be an issue going forward, especially as we face seasonally stronger quarters ahead of us? And could this be a reason for you to change the way you're thinking of Corpus Christi?

11:54 That's the first question. I'll stop here and then ask the second one.

12:02 Well, Alejandra, well, I think you're right. The demand for PET has actually been higher than our estimates, not only for this year, but I would say for the last three years. And it has compounded. So yes, the supply balance dynamic, particularly in the US, is tighter than normal. But I do believe that the capacity is in place in North America to supply the demand within the next month. And of course, there will continue to be imports into North America. So I do not believe issues of availability.

12:47 I think the market will be well supplied, but certainly I would hope that this relatively high utilization rate will help, of course, maintain margins at a profitable level. This is the answer to your question. Again, we do expect, as I did mention, that by the end of this second quarter, You know, the octal product, I mean the octal project will be authorized. We are working very hard to make that actually end of May.

13:33 So if we can accomplish that, that would also give us more flexibility to increase imports of PET into North America. So that would also help address this problem of availability. So yes, the situation is, I mean, operation rate is high, but we do not foresee problem of shortages or problems of availability.

14:01 And that was very clear. Yeah, that was very clear. Thank you. And then a second question, if I may, having to do with with the contract based part of your business. I was just hoping to understand this type of contracts, especially whether they have a an energy and a transportation component baked into them. And when throughout a typical year, can we expect to see all that portion of the contract based rolled over? in any given year. How does that work? Anything that can help us understand that will be very helpful.

14:36 Thank you. Normally, we sign, I'd say, one-year contracts with our customers in North America or with most of our customers in North America. And typically, these contracts are raw materials plus. So it's cost plus. So that probably answers one of your questions. Yes, to the extent that these contracts are raw material plus, then they will take into account some of the increases in energy. That's on the one hand. And also, in some cases, we even do contracts for more than a year, two years, perhaps three years at the most.

15:29 So that also sort of happens. And as I said, these contracts are typically agreed at the end of the year, in the last quarter of the year. So like for the US, we already have contracts with most of our customers for 2022. And we would revise these contracts in the last quarter of this year. So that's more or less the way this works. So at least from a year perspective, that keeps us in our largest market, which is the US, a certain stability. And in South America, for example, the situation is different. In South America, our contracts normally based more on Asia prices plus.

16:25 So that's a different dynamic. By definition, they are not as stable as in the US. But they are certainly, at least in terms of the volume, we know what we can sell there. Margin can change depending on what changes in Asia. But volume-wise, they're very predictable. I think you mentioned also, Alejandra, Corpus Christi. And perhaps, I'm sure this question will come up again. But let me tell you where we are in this moment. And perhaps as early as tomorrow, we are reviewing the status of the project. Significant progress has been made.

17:16 and we do have a very clear definition of the investment costs going forward. And I would say that most likely a decision will be taken during next month, May, let's say May probably to sanction the project if all of the shareholders are in agreement from the perspective of market, as I mentioned, it's a positive situation. And the cost, as I said, we believe we have more confidence in our estimate than months before. We believe we have a FEL3, which gives us a plus minus 10% degree of change. So we have the information ready for making the decision. And as I say, I think we will announce what the final decision is within the next month, month and a half at the most.

18:28 Understood. That was very clear and congratulations again. Thank you. Thank you, Alejandra. Our next question comes from the line of Tasso Vasconcelos with UBS. Tasso, your line has been unmuted. Please go ahead and ask your question.

18:43 Hi, everyone. Thanks for taking my questions and congrats on the quarter results. My first question is maybe a follow up on the margins for both polyester and PC segments. Margins are clearly remaining at very, very healthy levels, although some normalizations are expected looking ahead. Could you break down a little for the major upside and downside risks you view from both supply point of view and demand point of view? We have seen demand remaining very, very healthy. So believe risk is here are more on the supply side, but would be great to hear additional thoughts from you on that. My second question, you mentioned that demand remained strong despite the situation in Eastern Europe during the quarter. Could you also comment where Alpac was most impacted by the conflict? What did you feel so far as a consequence of the war other than in pricing and what might be the major implications for the company afterwards?

19:51 Those would be my two questions. Thank you.

19:56 Okay. As you mentioned, on the demand side, demand and supply, you did mention that. Well, demand, as I said before, we continue to believe that demand is going to be very stable for the rest of the year. We don't see major issues with demand. And again, margins, at least in what respects to the US market, also, I would say, stable for the reasons I just mentioned before. I did forget to mention during my presentation a very important event that has significance at least for the next five years, and that is the fact that on March this year, the FTC decided to extend for five more years, the anti-dumping duties against China, India, Oman, and Canada in PET.

21:05 That's an important development since at least for the next five years will give us that certainty. Again, on the margin, that should represent an upside. On the volume, as I say, we see things are stable. We don't see any threat of a significant reduction in volumes in both, in plastics and in polyester. On the supply side, you know, the supply side is where things could change. Polypropylene at the last quarter this year, this is the start of a new plant in Canada. And so that could be, let's say, or represent a downside, if you want to look at it that way.

21:59 Also, again, once the plants start, it certainly takes some time to get a normal operation. And on the supply side, in the short term, on polypropylene, well, there are two plants in the US on Forest Major and a third plant that is having some mechanical issues. So we believe that perhaps for the rest of May, those plants will be will not be operating, or at least not fully, at full capacity, so that in a way, you know, give us again confidence that margins could continue to remain healthy for a longer period of time.

22:45 And in terms of the implications, I mean, of the Russia-Ukraine war, I mean, other than, of course, the humanitarian consequences of that, which we very much regret, In our business, the main impact has been through higher energy prices, crude oil and natural gas prices. Those have been the main... impact that we've seen, the higher crude oil prices does not really impact our margins. In fact, sometimes as we have explained to you, it does help our margins, but it does have an impact in our cash flow because it does increase our investment in working capital as prices are higher or receivables are higher. It does have implication on the cash flow of the company.

23:41 During this first quarter, a significant part of our EBITDA went to finance the increasing working capital. Part of that had to do with these higher crude oil prices.

23:54 Of course, it does impact our natural gas prices as well.

24:03 Again, we believe that the impact of natural gas prices in the US, not globally, of course, globally it has had a big impact, but in the US, the impact or the reason we have seen increasing in energy prices has more to do with weather-related factors and with prices of coal. Prices of coal are very high. So that makes natural gas able to replace coal, increases the demand, and the higher or the colder weather, particularly during the month of April, has also had a significant impact in prices. Again, I think natural gas is more that than the war in Ukraine.

24:55 And the reason for that is the LNG facilities in the US are working already at full capacity. So there has not been a significant increase in LNG due to the war. It has increased the volume, but it has already been planned that way. So those would be, I say, the consequences of the Russia-Ukraine. We do have an operation. in the UK, as you know, and the increase in natural gas and power prices in that particular plant are more significant, but we are relatively hedged to those price increases with the contracts that we have.

25:49 That's very clear. Thank you. Thank you, Tasso. Our next question comes from Vanessa Quiroga with Credit Suisse. Vanessa, please unmute yourself and go ahead and ask your question.

26:02 Excellent. Thank you, Pepe and Jose Carlos Alex. My question is regarding your assumptions for the new guidance. What are you assuming for the Asian spread of PET and for the North American spread for polypropylene in this guidance? Not for the average of the year, but for the end of the year, if possible. And also, how much is impacting freight costs in import parity ?

26:36 Thank you. OK. Those are key questions, Vanessa. I would say, I think I did mention during my presentation that we are, in terms of PET, I think we're assuming Asian margins of $350. as opposed to 315 in the original guidance. In terms of polypropylene, actually, we are assuming that polypropylene margins end up the year as in the original guidance, which is believed that they're going to... And again, reasons that I mentioned has to do with the start of the new facility, the new plant in North America. And so in those two segments, we do assume that they're going to go gradually down.

27:26 In terms of ocean freight, that's the most difficult variable for us to forecast, to be honest. What we are saying is that, at least for this second quarter, the freights are going to remain pretty much where they are today. During the second half of the year, we assume that the cost per container is going to go down to somewhere between $6,000 and $7,000 per container versus the $9,000 to $10,000 that we have today. So we do assume that freight rates are going to go down in the second half.

28:14 And so those will be the key assumptions. In very simple terms, you could say that the guidance today is based on the fact that second quarter remains relatively strong, similar to first quarter, might even be a bit higher. And second half goes back very close to the original guidance. So again, If the situation were to remain as they are, we might have an upside in the guidance, but we will discuss when the time comes.

28:57 Pepe, in dollars per ton, how much is the freight?

29:03 in dollars per ton, we're talking of, depending of East Coast, West Coast, but you're talking around somewhere between 300 and $400 per ton.

29:15 Okay, okay, wow, yeah. Thanks, Pepe. You're welcome. Thank you. Thank you, Vanessa. Our next question comes from Andres Cardona with Citi. Andres, please unmute yourself and ask your question.

29:34 Thanks, Alejandro. Good morning, Pepe and Jose Carlos. I have two questions maybe staying with the previous question. I would like to understand what is your view of the market dynamics that are driving a kind of a reliability premium for the domestic production in the Americas? How sustainable do you think it could be over the mid to long term? And the second one is, very strong cash flow, outlook remains very positive, leverage remains low despite the hotel acquisition. So how are you thinking about capital allocation nowadays if you're still looking for M&A opportunities and how can you like prioritize it versus extraordinary dividends?

30:26 If you can share your thoughts about these two points.

30:32 Let me perhaps start with the second question. For the time being, as you know, we have the investment of the hotel facility and that we're going to have to pay within the next couple of months, so that will significantly increase our debt short term. Of course, we have secured their contracts, which are at very attractive rates, and we are ready to do that. The second step, Andreas, would be the decision on whether to continue or not with Corpus Christi, which I would say is high probability that we will. So that also represents a commitment, a capex commitment, for the next two, two and a half years.

31:28 We also have to take that into consideration. So in terms of what I would say very likely investments, those two are clear. And the other question, will we continue to look for M&A? Well, of course, we will continue to look for M&A. opportunities. And again, decision on whether to pay additional dividends or not are going to be based on the cash flow that we see during the rest of the year. But nothing has yet been decided other than the fact that we are ready to go ahead with Corpus Christi, and we're ready to go ahead with Opta.

32:22 And then your first question, you mentioned reliability premium. I do believe that that's a good question. I think during these last couple of years, I think a lot of our customers, domestic customers in particular, I think they have become more appreciative of the advantages of having a domestic supplier, not only in terms of the cost or the freight cost, but also in terms of the delivery schedule or the certainty of delivery, reliability of the shipments. So yes, I think that going forward, I think the customers are domestic customers that are going to be more willing to accept a higher premium relative to imports. I am convinced that that's going to happen, but difficult to put a number on that right now.

33:27 Thanks, Pepe. Thank you, Andres. Our next question comes from the line of Jean Baptiste Bruni with BBVA. Jean, please unmute your line and ask your question.

33:40 Hi, thank you very much. Just a couple of questions on Octal, actually. Can you be a bit more specific on the authorization you already received and the one which are still pending? And in the last call, you mentioned that you expected an impact on EBITDA after consolidation of about $80 million from the consolidation of Octal. Is the number still the same at current stage, or are you a bit more optimistic or pessimistic? Thanks.

34:12 All right. Well, in terms of OCTAL, I actually believe we have very good news. We have obtained the most important regulatory authorizations. The project has been approved by pretty much every country. where we had to request a permit, including USA, including Saudi Arabia, Brazil. Turkey. Turkey Turkey I think pretty much every country has approved the the or authorized us to to go ahead with the project so uh the only exception being Ukraine for for reasons that I am sure you can understand so Ukraine was originally part of the agreement we have a waiver to go ahead and and and close the transaction without authorization from Ukraine so I would say from the regulatory perspective we are all here to close the transaction.

35:11 What is pending right now is only the final agreements, mostly between OCTAL and their banks to be ready for closing. And that's what I said, we should, if things go as expected, be able to close sometime in May, actually, the transaction. We are very optimistic. The last authorizations we received were over this last weekend, Friday from the US and Sunday from Saudi Arabia. So there's actually no more conditions to be met. It's just the paperwork, you know, to close all the deal.

35:59 In my presentation, I mentioned that we expect, assuming that we close in June, we would expect an incremental EBITDA not considered in the guidance of $85 million. Again, this is aligned with sort of the assumptions behind the behind the over guidance that second half is going to be very much in line with budget or with with with the guidance should the margins uh continue uh you know as as they are today there yeah there is a significant upside on the avda that we could uh that we could get from hotel and and even more if we can close the transaction end of may we will have an additional month So yeah, I think there is an upside. And again, we're doing everything we can to close the transaction by the end of next month.

37:07 Perfect. Thank you. Thank you very much. Thank you for your question, John. We will now move on to written questions. Our first question comes from Ben Isaacson with Scotiabank. Pepe Ben asks, what is your aspiration between contracted versus spot PET volume? Why not move to 100% contracted and improve your multiple by reducing variability and investor uncertainty?

37:41 A significant portion of our contracts is on a cost-plus basis, pretty much everything in North America. Mexico as well. The only, as you say, spot prices that we have is South America, Brazil and Argentina. Those are the biggest PET sales that are not strictly on their sort of a cost plus or fixed price. And yeah, as you mentioned, it's a matter of, yeah, we could increase the certainty of stability of our cash flow. But again, remember, just imagine what would have happened to us if those prices have been fixed a year or two years ago. We would have lost a lot of upside.

38:40 So it's a matter of, again, negotiating with the customers what they want, and they just want to be more related to the prices in Asia. Again, in the last couple of years, that has been a very big advantage for us because the impact of the freight rates and the margins in Asia, we've been able to capture. If we had been on a cost plus basis, The margins will have been significantly lower. I understand your point. We would like to have everything stable. But perhaps if you are suggesting what we should do is to fix those contracts at times like this, when the freight is high and the margins are high. But as you can imagine, the customers are quite tough.

39:37 I mean, the issue of trying to have more predictability, more stability is something that we will continue to work. And then, as you say, we try to increase our multiple based on that. Thank you, Pepe. Our next question comes from Sofia Martin with GBM. Sofia asks, given the higher than expected results and revised guidance, can we expect an extraordinary dividend?

40:09 Sofia, I think, again, as I mentioned, that is going to depend on, you know, cash flow generation from now on. And also the, I would say, Octal is pretty much a done deal. from our perspective, and also the decision to move ahead with Corpus. But if the results continue to be strong, like guidance or a little better than guidance, which is a possibility, to be honest, then I would say yes. I think it's a good chance that the board will decide to increase the dividends. Always, of course, watching the leverage of the company without going to something that would reduce our financial stability.

41:10 That's a possibility. Thank you, Pepe. Maybe following that thread of conversation, our next question is also from Ben Isaacson, who asks for pro-forma leverage post-Octal acquisition.

41:30 I would say with octal only, I think it would be like 1.5, around 1.5.

41:35 1.5, 1.6, yeah.

41:37 But, Ben, our goal, as we have explained to you many times, would be to get closer to 2. So, to 2x. So, that's something that we have some flexibility there. and hopefully we will continue to reduce our debt very quickly. I mean, when people say, yeah, what happened with your margins normalized? Well, I don't know, margins normalized also the investment in work capital is gonna come down most likely and that will free a lot of cashflow. I think our investment in working capital over the last two years, has been more than 400,500 million dollars.

42:26 so so yeah we do have yeah so you say well margins margins uh normalize every Diego's a little bit down yeah but then a working capital most likely would also come come down but but those are that's the range then that we're considering uh you know trying to stay below two two times in even you know in even in the worst case Thank you, Pepe. Our next question is also from Ben, who asks, what de-bottlenecking opportunities are there to permanently increase both polyester or plastics and chemicals production volumes? What is the timing and capex behind those?

43:11 We are already in process with some de-bottleneckings of some of our plants. But but not major the bottleneckings, you know, small the bottlenecking in in our Brazilian PTA plant. We have that under consideration and. The small the bottlenecking in our Pearl River facility also is on the way and for the time being, those are the the main projects. But. We were a very small debottlenecking in EPS in the US. Eventually, we do believe that we're going to pursue a project in Altamira to debottleneck PTA a little bit. But more than debottlenecking, I think the objective is to improve the cost, to reduce cost. Reduce cost and improve or reduce our carbon emissions.

44:20 So we do have some opportunities in all of those areas. Thank you, Pepe. Our next question is also from Ben, who asks, the increase to your contract margin, how much of that was because of higher ocean freight rates? And if freight rates return to normal levels, how much of the contracted $100 per ton and PET margin could be lost?

44:53 That's a good question. I would say probably in the US market, probably I would say perhaps like five cents per pound could be lost from the contract. Very well. Thank you, Pepe. We have another question coming in via live from Alejandro Chavelas. Alejandro, your line has been unmuted. Please go ahead and ask your question.

45:27 Hi Pepe, Jose Carlos, thanks for the space and congratulations on the results. Just a question, I've been looking at Asian polyester producers and if I'm reading this correctly, polyester fiber margins have been falling a lot and utilization of polyester producers has been falling a lot because of the COVID lockdowns. Could you help us understand what is the impact of that in your business? Like will PTA in particular PTA spreads fall significantly? How do you read this? Because I know it's not exactly the same business aspect, but there are some cross read implications. So if you can help us understand that better, that's super useful.

46:11 Yeah, well, of course that they are there are impacts our exposure to fibers though as you know is very very limited nowadays we shut down our fiber capacity in in the us last year so we have a really very small capacity polyester fiber so the direct impact into fibers is very limited uh in terms of pta i guess uh you are right alejandro i mean When you look at the margins, PTA margins in Asia, under the circumstances, I would say they are on the low side. And I think PTA margins in Asia are on the low side. I mean, in the low side, you consider all the cost of other chemicals into into the PTA, which have been higher, and cost of energy.

47:03 So the margins, you compare historically, they look OK. But if you add those factors, those cost factors, the margins are actually relatively low in PTA. And I think the explanation is exactly what you're saying, the fact that the polyester fiber demand has not been as strong as expected. So I think we already have some of that in our PTA margins. Again, fiber is not an important sector for us. And PET, what I explained before, PET, we are sort of isolated, sort of isolated at least versus China because of the anti-dumping.

47:49 In polyester fiber, we do have also anti-dumping filament. to the US. We are going to have a dumping in Mexico against polyester filament from China and India also starting this October. So in Brazil, we do have some textile filament as well. We also have an anti-dumping against China. So I guess all of these factors sort of protect us a little bit.

48:23 from the Chinese or Asian situation in fibers right right I understand so so the the impact on PTA margins from this this this uh struggling polyester industry is already reflected in current PTA margins also right now it's more than downside at this point I think so okay great thanks Pepe You're welcome. Thank you, Alejandro. Well, that was the last question we have in our queue. As always, I'd like to remind you that you can find both a video recording of today's webcast as well as a full transcript on our website at alpec.com. Thank you all for participating today. Have a great day.