Orion sales, profits up despite lower volumes

Houston, Texas – Orion Engineered Carbons has seen fourth quarter 2018 sales and profits rise within its rubber blacks business, helped by base price increases and product mix.

Revenue rose by $34.8 million (€30.8 million), or 15.5% year-on-year, to $259.1 million in the three months to end of December 2018.

Lower volumes and foreign exchange impact partially offset the pass through of higher feedstock costs to customers, product mix and base price increases in the 2018 agreements, Orion announced 7 March.

Volumes declined 7.1% to 195 kilotonnes for the final quarter of the year, as a result of a plant closure in South Korea and trading conditions in China.

Orion closed down a 45-kilotonne-per-annum (ktpa) carbon black facility in Bupyeong, South Korea, transferring production capacity to its other South Korean plant in Yeosu, in 2017.

Gross profit increased $3.7 million, or 7.1% to $56.5 million for the period.

Orion has pinned the rise to base price increases, reduced depreciation and product mix.

Adjusted EBITDA (earnings) for the rubber segment also rose 6.1%, to $35.4 million reflecting the development of gross profit.

“Orion delivered strong financial results for the fourth quarter and full year 2018 with performance led again by our rubber carbon black segment,” said Corning Painter, Chief Executive Office.

According to Painter, Orion’s rubber business secured “significant price increases” in the 2017 to 2018 cycle.

“This, combined with good execution and solid volumes translated to strong performance in 2018,” he added.

The consolidation of Orion’s Korean facilities, Painter said, “unlocked value for Orion" through improved operational efficiencies and the elimination of "less profitable rubber grades."

“Without this consolidation of our facilities, our rubber volumes would have been essentially flat in the second half of 2018,” he added.