Houston, Texas – Orion SA’s rubber carbon black unit has recently posted a reverse in earnings despite slightly higher volumes during the quarter ended 31 March.
First quarter adjusted earnings (EBITDA) fell 10.0% year-on-year to $57.4 million, on 2% lower sales of $332.0 million, Orion reported 2 May.
Segment volume increased by 4.6kt, or 2.5% year-on-year on higher demand in the Europe, Middle East, Africa (EMEA) and Asia-Pacific regions.
Orion linked the decline in sales to “the pass-through effect of declining oil prices, partially offset by higher volume.”
Adjusted earnings decreased primarily due to “favourable timing items in the prior year” as well as lower volumes in the North American rubber segment.
Furthermore, lower cogeneration pricing in Europe took a toll on earnings despite this factor being partially offset by higher EMEA and Asian volumes.
Rubber gross profit margins stood at $435/tonne, “well above last year’s average of $409/tonne” but 6.9% lower than the same quarter last year.
“Prior to 2022, our rubber gross profit margins typically ran in the $200 to $300 per tonne range,” noted Orion CEO Corning Painter.
The latest figure, said Painter, show that “key markets continue to restructure and this is the ‘new normal’ from which we can build.”
According to the company leader, this trend was signalled by the announcements of three planned new tire factories in “the first quarter alone.”
Looking ahead, Painter said “for planning purposes, we are assuming the current soft economic growth conditions continue throughout 2024.”
