Orion rubber blacks earnings dip on higher costs, 'soft' demand

Houston, Texas – Orion SA has reported an 18% year-on-year decline in second quarter earnings (EBITDA) within its rubber carbon black business.

For the quarter ended 30 June, the segment posted adjusted earnings of $47 million, down 18% year-on-year, on marginal sales growth to $311 million, Orion reported 1 Aug.

Reflecting “soft demand,” rubber black volumes declined by 3.5 kilotonnes, or 2.0%, year-on-year due mainly to lower demand in both the Americas and Asia.

Orion linked its earnings decline primarily to higher fixed costs, a favourable effects last year from the pass-through of raw material costs and cogeneration returns.

These impacts were only partially offset by higher volumes in Europe and improved contractual pricing.

Over the first six months, the segment reported a 14% year-on-year decline in adjusted earnings to $104.5 million – on higher fixed costs and reduced volumes in the Americas.

Net sales for the first half declined marginally to $643 million, despite a slight 0.3% year-on-year increase in volumes.

Commenting on the results, CEO Corning Painter said rubber segment profitability was “relatively steady” despite “softer demand and mixed macro trends globally.”

The group, noted finance chief Jeff Glajch, had also witnessed “unusually high co-generation earnings” last year, creating a high level of comparison this year.

For the second half of 2024, he said Orion expects "better profitability," due mainly to "improved plant utilisation" and despite continuing softness of the rubber market.