Orion upbeat despite Q3 declines at rubber blacks unit

Houston, Texas – Orion Engineered Carbons SA has posted a 4.8% year-on-year decrease in third quarter net sales to $247.4 million (€221.6 million) at its ‘rubber carbon black’ business.

Earnings (adjusted EBITDA) edged up 0.6% to $38.1 million, helped by lower selling, general and administrative expenses, though gross profit fell 5.9% to $57.3 million, Orion reported 31 Oct.

The sales decline was linked to the pass-through of lower feedstock costs to customers, lower volumes and negative foreign exchange rate translation – partly offset by base-price increases.

Rubber black volumes decreased by 2.9% year-on-year, reflecting lower ‘mechanical automotive’ demand in China and Europe and stable replacement tire demand, noted the company.

The company attributed the lower earnings to “higher negative feedstock differentials, lower volumes, lower energy sales and negative foreign exchange rate translation effects offset by base price increases.”

Orion “executed well despite weakness in Asian markets and with automotive OEMs, said CEO Corning Painter. “Other key markets have weakened as the year played out along with the broader economy.” 

The trend impacted the ’mechanical rubber goods’ business “while tire remained stable,” added Painter, noting that Orion realised rubber segment price increases over the three months to 30 Sept. 

Noting a solid cash-generation performance group-wide, the CEO stated: “We will emerge from this slowdown stronger, and better positioned competitively, to take advantage of our future growth opportunities.”

Looking ahead to 2020, Painter forecast a “strong 2020 pricing cycle and stable volumes” for the rubber blacks business, driven by replacement tire demand. 

For Orion as a whole, Painter said: “We will remain disciplined in our pricing management, not chasing volumes. Instead, we plan to advance our new product offerings, get paid for value, and de-bottleneck high value offerings.”