Cabot braces for ‘severe Covid impact’

Boston, Massachusetts – Cabot Corp. has seen a decline in second quarter sales in its reinforcement materials segment as a result of Covid-19 pandemic but expects an even more significant impact in the coming months. 

Sales for the three months to end of March came in at $355 million (€328 million), down 20% year-on-year, due to 14% volumes decline, particularly in Asia.

Segment earnings remained flat at $61 million during the quarter, helped by higher margins and pricing/mix effects both in the industrial and tire sectors.

The Covid impact, said the company 11 May, was “most pronounced” in Asia during the quarter, but Americas as well as Europe, Middle East and Africa (EMEA) were also affected at the end of March.

“Looking ahead to the third quarter, we expect results in reinforcement materials to be severely impacted by Covid-19 as the temporary tire and auto customer shutdowns in Europe and the Americas will significantly impact volumes,” said CEO and president Sean Keohane in an earnings call. 

In addition, the company expects Asia Pacific volumes to be weak as a significant part of that region's tire production is export related, the company official added.

According to Keohane, second quarter volumes were down 13% in Europe and 8% in America following the spread of Covid-19 to the regions in late March. 

The company expects volumes in the third quarter to be down in the range of 40% as compared to the same quarter last year. 

Cabot also anticipates margins and profitability in the segment to be "unfavourably impacted by the rapid drop of feedstock prices," the company official added.

Comments in transcript sourced from Seeking Alpha.