Orion rubber blacks deliver strong first quarter

Luxembourg –  Orion Engineered Carbons SA has notched up a 36.6% year-on-year increase in earnings (adjusted EBITDA) to €26.7 million at its Rubber Carbon Black business in the first quarter of 2017.

The higher earnings were achieved on revenues of €195.3 million, 30.9% above the level in the first quarter of 2016. The sales increase, said Orion, was mainly due to the pass-through of higher feedstock costs to customers with index-pricing agreements and price increases in certain regions.

Meanwhile, Orion linked the higher earnings to regional price increases, the operating performance of its facility in Qingdao, China, efficiency improvements and restructuring gains from the closure of its facility in Ambès, France.

These positive factors more than offset unfavourable feedstock differentials, which the company said it is still trying to fully address through customer contract mechanisms.

The Ambès plant closure reduced volumes for the Rubber Carbon Black business by 4.8% to 208.1 kilotonnes in the first quarter of 2017 compared to 12 months ago. However, the reduction was largely confined to marginally profitable standard grades, said Orion.

“Our Rubber Carbon Black volume was largely stable except for sales associated with the closure of our French facility which impacted volumes by 4.8% as we reduced marginally profitable grades produced in that facility,” said CEO Jack Clem

Commenting on full-year prospects, Clem said: “Our markets continue to show the strength we anticipated for 2017. Our facilities are mostly running at high operating rates in the environment where we believe industry-wide utilisations are tight or tightening.

“This seems especially the case for our specialty grades and for higher grade technical rubber goods.”