Low-cost tire imports weigh on Orion performance despite higher volumes

Houston, Texas – Orion SA’s rubber reinforcement segment continued to show weak performance in the third quarter of the year, due in part to the indirect impact of low-cost tire imports and despite higher volumes.

Over the three months to end of September, rubber carbon black segment volumes increased by 6.5% year-on-year to 176kt, driven by higher demand in the Asia Pacific and Americas regions.

Net sales, however, declined by $10 million (€8.7 million), or 3.3%, to $290.9 million, primarily due to the pass-through of lower oil prices, partially offset by higher volume, Orion reported 4 Nov.

Adjusted earnings (EBITDA) declined by $16.8 million, or 31.8%, year-on-year to $36.1 million, driven mainly by the unfavourable impact from the pass-through effect of raw material costs as well as “unfavourable customer and regional mix.”

During the quarter, Orion said, elevated levels of low-value tire imports from Asia indirectly impacted rubber black demand in core Western markets and the company’s overall profitability.

Over the first nine months of the year, the segment increased volumes by 27.3kt, or 5.2% year-on-year to 548.1kt, again driven by higher demand in the Asia Pacific and Americas.

Sales for the nine-month period decreased 3% to $916.2 million, due to the pass-through of lower oil prices, partially offset by higher volume.

Adjusted earnings for the nine months decreased 20% year-on-year to $125.8 million, primarily due to “unfavourable customer and regional mix” and the impact of raw material cost pass-through.

“Persistent macro uncertainty and challenges specific to our tire industry customer base affected our financial performance in the third quarter,” said CEO Corning Painter.

Looking ahead, Painter said excess tire channel inventories will remain 'a demand overhang' through the rest of the year.

However, Orion believes that the “evolving global trade paradigm,” including tariffs, should ultimately support the group’s tire customers.

Painter added that Orion is intensifying efforts to improve competitiveness and navigate the current environment.

These efforts include "a comprehensive analysis" of cost structure and underperforming assets, headcount reductions, and tighter prioritisation of mission-critical maintenance projects.