Orion rubber-black sales, earnings up sharply

Luxembourg – Orion Engineered Carbons SA has posted a 25.6% year-on-year rise in earnings (adjusted EBITDA) to $35.7 million (€30.4 million) for its Rubber Blacks business, on first quarter sales 27.4% higher at $265.0 million.

Industry demand for rubber carbon black remained strong in the three months to 31 March, as sales volumes increased 4.3% to 217.0 kilotonnes, said the group’s 17 May quarterly results statement.

Orion linked the higher volumes to increased demand in Europe, South Korea and China, though a “restriction of capacity” on standard rubber grade products impacted US volumes.

Revenue gains, it noted, also reflected the pass-through of higher cost of feedstock to customers with index-pricing agreements, positive foreign exchange rate translation effects and base price improvements.

These factors also buoyed earnings, as did the impact of improved cogeneration income resulting from a higher energy-pricing environment. Accordingly, gross profit per tonne increased 13.6% year-on-year to $269.20 in the first quarter, said Orion.

“Our markets have strengthened worldwide and helped drive revenue up by 25.5% with gains in both Specialty and Rubber volumes,” CEO Jack Clem said of Orion's performance group-wide.

“The stronger markets also supported price increases in both segments,” he added. “While foreign exchange rates also favoured revenue, the fundamentals of volume growth with stronger pricing were apparent in this good start to the year.”

Orion’s rubber-black production network, reported Clem, was “pushed to near capacity and better pricing was indeed achieved, helped in part by a continued strong performance by our facility in China which managed to have a record quarter in spite of the challenges of a quite volatile feedstock market.”

For the full-year, Clem expects Orion to build on its good start, helped by strengthening markets, company initiatives and foreign exchange developments. He raised the outlook for 2018 adjusted EBITDA, group-wide, to between $280 million and $300 million.