Cabot rubber black hikes to add $80m to 2023 revenues

Boston, Massachusetts – Cabot Corp. expects to achieve an extra $80 million (€79 million) in rubber carbon black revenues as a result of increased prices in its 2023 tire customer agreements.

“[In tire agreements] we achieved price and product mix improvements that we anticipate will produce $35 million per quarter in increased prices,” said Sean Keohane, president and CEO, during an 8 Nov conference call.

The figure, Keohane explained, will be netted down by about $15 million to $20 million per quarter due to the impact of foreign currency translations as well as higher inflation on the cost-base.

“And at this point, we have reached agreement with substantially all of our major customers,” said Keohane during the fourth quarter earnings call.

“This is definitely earlier than in a typical year. And I think it reflects the desire of our customers to secure supply in a tight market,” he added.

According to the Cabot boss, supply-security, especially after the Russian invasion of Ukraine, have been "the primary motivation" for most customers to reach early agreement.

“So, overall, I would say the outcome of the negotiations with customers has been a very good one for Cabot and for our customers,” he said.

Cabot finished its 2022 financial year strong with full-year revenue up 26% at $4.3 billion.

Reinforcement materials segment, which amongst other products manufactures carbon black for the rubber & tire industry, reported a 62% increase in fourth quarter EBIT (earnings) to $109 million.

Cabot linked the increase in earnings to improved unit margins from higher pricing and higher volumes across all regions.

Segment sales were up 42% at $700 million during the fourth quarter, helped by increased volumes and pricing.

Volumes, Cabot said rose 4% in Asia and Americas each, while Europe registered a 5% year-on-year increase during the quarter.

For the full year, segment earnings increased 24% to $408 million, on 44% higher sales of $2.5 billion.