Kraton posts strong Q2 results, notes challenges ahead

Houston, Texas – Kraton Performance Polymers Inc. has posted an almost four-fold growth in earnings (adjusted EBITDA) on second-quarter sales volumes of $455 million (€410 million), up 17.9 percent on the prior-year quarter.

Adjusted EBITDA for the three months to 30 June came in at $92.7 million (€83.6 million), compared to $25.1 million in the second quarter of 2015, said a 27 July results announcement.

The earnings hike included $10.0 million of year-on-year gains from integration synergies and cost-reduction initiatives in the second quarter 2016.

Kraton's Polymer segment generated adjusted EBITDA of $39.2 million, compared to $25.1 million for the prior-year second quarter.

Performance Products revenues grew 5 percent to $144.8 million: reflecting higher sales of paving and roofing materials, partially offset by lower sales of SIS grades for packaging and industrial adhesives. Business was also affected by global overcapacity for SIS.

“Our second quarter 2016 results reflect strong sales volume growth in our Polymer segment and a sequential improvement in profitability in our Chemical segment,” said Kevin Fogarty, Kraton's president and CEO.

Sales volume in Kraton’s Polymer segment rose nearly 18 percent year-on-year, Fogarty picking out a “notable improvement” in paving and roofing sales volumes as a key factor.

At Kraton’s chemical segment, adjusted EBITDA for the second quarter 2016 was $53.5 million. New outlets for various streams of intermediate products contributed to an 11-percent rise in volumes.

“2016 can best be described as a year of execution for Kraton. Specifically, integrating our transformational acquisition of Arizona Chemical, and this includes capturing a significant portion of the cost-based synergy target of $65 million,” said Fogarty.

Meanwhile, he said Kraton is making “good progress” with plans to directly link its Cariflex latex manufacturing with polymerisation on site in Brazil, expand its USBC manufacturing capability in France, and start-up a $185 million 30 kilotonne HSBC plant in Taiwan.

Looking ahead, Fogarty said weakness in global adhesive markets will likely impact Kraton’s adhesive sales in both its Polymer and Chemical segments for the remainder of the year.

In the Polymer segment, abundant global SIS capacity and increased availability of low cost isoprene has intensified pricing pressure for certain of our SIS product grades.