Trinseo lowers Q3 guidance due to materials costs, weak tire market

Berwyn, Pennsylvania – Trinseo SA expects its third quarter 2018 results to be below previously issued guidance, mainly due to higher raw materials costs, market uncertainty in China and a continuing weaker tire market.

In its preliminary third quarter results published 9 Oct, the materials supplier said net income is estimated to be between $74 - $80 million and earnings (adjusted EBITDA) estimated to be between $140 - $146 million for the quarter.

Previously issued guidance for the third quarter 2018 was net income of $88 - $96 million and adjusted EBITDA of $150 - $160 million.

According to Trinseo, the lower-than-expected results have been mainly due to the performance of Latex Binders, Synthetic Rubber, Performance Plastics, and Polystyrene segments.

The Performance Plastics and Synthetic Rubber segments, noted Trinseo, were impacted by higher raw materials costs, a slowdown in the automotive industry and the continuation of a weaker tire, which led to lower-than-expected sales volume and margin compression.

Uncertainty in China from ongoing trade negotiations and customers’ destocking in anticipation of lower feedstock prices in the future have also hit the profitability of those segments.

“Our expectation going forward is that weakness in the automotive and tire markets, as well as the slowdown in China will impact our future results to the extent trade uncertainty persists,” the company release said 9 Oct.

Commenting on the results, Chris Pappas, Trinseo’s president and chief executive officer said the company was “actively evaluating and taking actions” to address the challenges and minimise impacts on our future results.

Trinseo will announce its full third quarter results on 7 Nov.