Orion’s rubber black earnings dip on higher costs, strong dollar
9 Aug 2022
Sales up 47% in second quarter as volume growth continued in Americas, Europe
Houston, Texas – Orion Engineered Carbons has seen its rubber black earnings drop slightly in the second quarter as labour and administrative costs continued to mount.
The US carbon black supplier reported a 3.8% year-on-year decline in second quarter adjusted earnings (EBITDA) to $39 million (€38 million), on 47% higher sales of $360 million.
Segment volumes increased by 9.5 kilotonnes, or 5.2%, year over year, reflecting higher demand in Americas and Europe, Middle East and Africa, Orion announced 4 Aug.
Orion linked higher sales primarily to passing through of higher feedstock costs, pricing, higher volume and favourable product mix.
These, it said, were partially offset by the impact of unfavourable foreign currency translation and the strong dollar.
The decline in earnings was also driven by the $2.5-million impact of unfavourable foreign currency translation and the $11.5-million higher employment costs, lower inventory build and maintenance costs.
“The second half of 2022 will be busy for us,” said CEO Corning Painter commenting on the outlook for the year.
The company, he said, is “on track” to complete the air emission controls work in Borger, Texas, as well as the mechanical phase of the greenfield plant in Huaibei, China.
Furthermore, Orion is about to complete “a meaningful debottlenecking project” and is working on shifting European reactors away from natural gas firing.
“We co-generate electricity and/or provide community heating at all of our European sites that use natural gas, so there is a good case for us being exempted from curtailments,” he said.
Nonetheless, he went on to say, Orion is “working hard” to meet the 15% voluntary natural gas reduction target promoted by the EU.
Orion has confirmed its adjusted earnings range of $310 million to $340 million for the year.