Low demand hits Orion rubber blacks business 

Houston, Texas – Orion Engineered Carbons’s rubber carbon black business shrank in the fourth quarter of 2019, due to weak demand in the tire and mechanical rubber goods (MRG) industries.

Net sales decreased 19.8% year-on-year to $207.7 million (€188 million) in the three months to end of December 2019, as a result of the pass through of lower feedstock costs to customers and lower volumes, Orion reported 21 Feb. 

Rubber black volumes decreased by 18.7 kilotonnes or 9.6% compared to the fourth quarter 2018 primarily due to lower demand in South Korea, China and Europe and continued MRG weakness.

Rubber earnings (adjusted EBITDA) fell 11.3%, to $31.4 million in the quarter, reflecting lower volumes and general and administrative expenses.

“In 2019 we adopted a leaner management structure, renewed our revolver at more attractive rates and achieved price increases in our rubber carbon black segment,” said CEO Corning Painter.

Orion did not disclose full results for 2019, but said it has achieved “meaningful rubber price increases” for the year 2020.

“During the [fourth] quarter we successfully installed surcharge mechanisms to better recover raw material costs across the majority of our 2020 Rubber contracted volumes,” said Painter.

The new mechanism, he added, will further de-risk business by reducing earnings volatility in the years ahead.