Trinseo's synthetic rubber unit posts 53% decline in Q3 earnings

Berwyn, Pennsylvania – Trinseo SA’s synthetic rubber business has reported a 53.3% decline in earnings (adjusted EBITDA) for the third quarter of 2019, due mainly to lower sales volume of emulsion styrene butadiene rubber (ESBR).

Sales for the three months fell 24% to $104 million (€94 million), while segment earnings stood at $7 million, Trinseo announced 4 Nov.

The US supplier of synthetic rubber, plastics and latex binders linked the declines mainly to the pass through of lower raw materials costs as well as lower ESBR sales volume due to weak market conditions and competitiveness in the market. 

The company’s ESBR volumes were down double-digits, causing a “big margin hit”, according to executive vice president and chief financial officer David Stasse.

In addition, “$5 million of bill draw impact and also $2 million of timing impact,” weighed in on the segment’s earnings, explained president and CEO Frank Bozich in an earnings call 4 Nov.

“We like the opportunities that we have in rubber, especially because we’re targeting through our product line high-performance tires, which is where our styrene butadiene rubber (SSBR) technology goes,” explained Bozich.

According to Bozich, the company’s overall year-to-date SSBR margins have been “relatively stable” to prior year or last to prior year. 

In the third quarter, the company increased volume sales of solution styrene butadiene rubber by 3%.

“When you look at the future for our business, it’s all driven by growth in high performance tires and how we qualify our new generations of SSBR technology,” Bozich added. 

The company, the CEO explained, had to “drag from” ESBR, which he said is "more of a commoditised or a standard tire rubber", the market for which does not grow as fast as high performance tires during economic depression.

“So again, I think in this environment, our results were driven by the decline in standard tires, but our outlook is pretty,” the CEO said, "we like where we are given our position in high-performance tires with SSBR.”