Orion rubber black earnings up 24% despite lower volumes

Luxembourg – Improving profitability at its Rubber Carbon Black unit lifted second-quarter earnings (adjusted EBITDA) at Orion Engineered Carbons SA to €58.4 million on group sales up 20.7% to €299.3 million.

While earnings at its Specialty Carbon Black unit fell 10.0%, the rubber fillers business “continued to improve” raising adjusted EBITDA by 23.6% from last year's second quarter to €23.6 million, Orion announced 3 Aug.

The mixed performances left adjusted EDITDA at the Luxembourg-headquartered group up by just 1.1% year-on-year to $58.4 million.

The earnings gain at the Rubber Carbon Black business was achieved on significantly lower volumes, which were down by 12.1% to 201.3 kilotonnes (kt).

Orion linked the volumes decline to the late-2016 closure of its facility in Ambès, France, extended maintenance at a US facility and the allocation of some rubber capacity to speciality products in Asia.

Nevertheless, rubber-black revenues increased by 25.6% to €188.3 million on pass-through of higher feedstock costs to customers on indexed price agreements, favourable currency moves and pricing improvements.

Orion, meanwhile, linked the €4.5-million increase in adjusted EBITDA at the Rubber Carbon Black unit to better margins, operational cost efficiencies and improved selling, general & administration costs.

“Our end markets have maintained a reasonable amount of stability and are increasingly signalling growth in our major segments,” said Jack Clem, Orion’s chief executive officer.

The rubber business, added Clem, “benefited from stable demand, an improving portfolio of higher margin technical grades and the improvements in cost as a result of our internal initiatives, including the shuttering of capacity in France.”

Looking to full-year prospects, the CEO said “we continue to see relatively stable to improving supply and demand dynamics in our end markets for both the rubber and specialty businesses. There has been some recent volatility in oil prices and a strengthening of the euro against the dollar.

“As a result, we remain a bit cautious about the impacts on our business by these kinds of moves.”