Orion announces 'discrete' job cuts to improve rubber segment performance

Houston, Texas – Orion SA has launched 'discrete job cuts' to improve its rubber carbon black segment structurally, amid soft demand in Europe and North America.

The Houston-based supplier noted weak rubber demand in the final quarter of last year, which it attributed to “continued pressure on Western tire production.”

The pressure, CEO Corning Painter explained, was driven by higher levels of tire imports into North America and Europe, respectively, from Southeast Asia and China.

In addition, some year-end inventory adjustments at certain key customers added to the challenges, Painter said in a 15 Jan announcement.

In response to the challenges, Orion said it initiated a plan in the fourth quarter of 2024 to reduce its non-plant workforce by 6%, expecting to realise $6 million (€5.8 million) in annualised cost savings by 2025.

“We initiated discrete cost reduction actions... which we expect to substantially complete in the first quarter of 2025,” Painter said.

Despite the stepped-up tire imports into Orion’s key geographic markets, Painter said he expected the new rubber segment commercial strategy to position it “well for 2025, and for when trade flows rebalance within the global tire market.”

Meanwhile, Orion has lowered its earnings projections for fiscal year 2024, expecting it to fall below the previously guided range of $305–315 million.

According to the company, the lower outlook is primarily due to foreign exchange translation impacts from the strengthening dollar and one-time costs associated with its cost reduction plan.

Orion also cited "weaker-than-anticipated" rubber segment volumes in the fourth quarter and a "slightly less favourable" speciality segment mix as contributing factors to the revised guidance.

Looking ahead to 2025, Painter projected “modest growth,” driven by factors within the company’s control, despite the ongoing foreign exchange headwinds.

The growth, he explained, would build upon “the structurally improved returns our company has generated over the past several years.”