Orion expects ‘significant earnings growth’ on strong rubber pricing

Houston, Texas – Carbon black manufacturer Orion Engineered Carbons has beat estimates in the third quarter of 2022 and is set to deliver a strong 2023, due mainly to the performance of its rubber carbon black segment.

The company saw adjusted EBITDA (adjusted earnings) rise 21% to over $80 million (€80 million) during the third quarter, as sales grew 38% to $543 million.

Orion linked the growth in performance primarily due to “pricing, favourable product mix and higher volume in rubber carbon black segment.”

These, it said, offset lower sales volume in specialty carbon black segment and higher selling, general and administrative costs.

The rubber black segment reported an 80% increase in adjusted earnings to $49.4 million during the three months to end of September, on 54% higher sales of $373 million.

Rubber black volumes increased by 18.0 kmt, or 10.4%, year-over-year, reflecting higher demand in Americas and Europe/Middle East/Africa.

Orion linked higher sales primarily to pricing, higher volume and favourable product mix, partially offset by the impact of unfavourable foreign currency translation.

Adjusted earnings’ growth was attributed to higher volume, pricing and product mix, partially offset by the strong dollar.

Adjusted earnings margin rose 190 basis points to 13.2%, primarily due to the revenue impact from higher feedstock prices.

“Our strategy in 2023 is clear. We believe we will achieve significant EBITDA growth next year based on our very strong rubber pricing cycle,” said president and CEO Corning Painter.

According to Painter, Orion’s 2023 contract negotiations in the rubber business have been “principally completed”.

In addition, the company has completed its debottlenecking projects, which were scheduled for late 2022.