Orion reports 57% higher rubber profits despite lower volumes

Houston, Texas – Orion Engineered Carbons has seen a significant lift in earnings (adusted EBITDA) at its rubber blacks business in the first quarter.

Adjusted earnings rose 56.8% to $64 million (€58 million), on 10.5% higher sales of $339 million, reported Orion 5 May.

Strong base-prices were the main driver of higher revenue, delivering gross profit per tonne of $467, up from $321 in the first quarter of 2022, explained CFO Jeff Glajch.

For the whole year, Glajch went on to say, Orion expects its rubber business to deliver a profit per tonne of ‘mid-$400s’, against a $336 average last year.

The strong results were despite a backdrop of declining volumes, which were down 3.8% year-on-year at 180 kilotonnes in the first quarter.

“We are confident that the progress we have made in rubber pricing is sustainable due to the continuing trend toward localisation or de-globalisation,” Glajch said.

Higher prices will also be supported by “significant customer investments” in onshoring as well as “ongoing regional supply/demand imbalances in both North America and EMEA.”

While expecting the underlying business to remain “really strong”, Orion anticipates the second quarter to be “a little bit weaker than the first one”.

This, explained CEO Corning Painter, is due to a ‘weak April’ as customers “pulled back”.

May, however, “looks pretty good so far as we go through it,” said the Orion chief executive.

“If you look at the indicators of rubber demand…things like miles driven are nice, but they tend to be a lagging metric,” Painter said.

“So, it's a little bit of a mixed picture… but all in all, I think, given April, it's going to be a little bit weaker for this quarter,” he added.