Raw-material costs, weaker margins weigh on Cabot reinforcement business

Boston, Massachusetts – Cabot Corp. has reported lower full-year sales and earnings within its Reinforcement Materials business, which largely produces rubber grade carbon blacks.

Over the 12 months to end of September, the US carbon black producer posted segment earnings before interest and taxes (EBIT) of $379 million (€333 million), down 25.4% from $508 million in fiscal 2025.

Annual sales declined 1.7% to $2.30 billion from $2.34 billion, Cabot announced 2 Nov.

In its fourth quarter, segment EBIT fell 26.9% year-on-year to $87 million, compared with $119 million a year earlier, despite a 12.6% increase in sales to $634 million.

Cabot attributed the quarterly earnings decline primarily to “lower gross profit per tonne,” partially offset by higher volumes.

The reduction reflected the outcomes of its 2026 customer agreements and a "less favourable regional product mix," the company said.

Global Reinforcement Materials volumes increased 5% year-on-year during the fourth quarter, including a 10% rise in Asia Pacific and 3% growth in the Americas.

Volumes in Europe, the Middle East and Africa, however, fell 7%.

Speaking during a 3 Nov earnings call, Cabot president and CEO Erica McLaughlin said European tire production had seen "not much of an increase" this year, despite declining tire imports.

"It has not led to a robust tire production market," she said.

McLaughlin also acknowledged that Cabot had "lost share" during its 2026 customer contract negotiations.

"That is the main driver of why our volumes have been down in this past quarter and earlier this year," she added.

The Cabot chief noted that Chinese carbon black prices had been affected by movements in coal tar costs, while competition in the market remained intense.

She said the business continued to generate attractive returns in China, although margins remained below those achieved in Western markets.

Looking ahead, McLaughlin said industry forecasts point to a global tire production that is expected to grow at 0.3% in calendar year 2026 and at 0.9% in calendar year 2027.

Growth next year is expected to be led by Southeast Asia and Europe, with relatively flat production in the Americas and declining output in China.

Cabot is also negotiating its calendar-year 2027 tire customer agreements, with approximately one-third of the negotiations concluded as of 3 Nov.

McLaughlin said the results varied by customer and it was too early to assess the final outcome.

On manufacturing, she said Cabot was investing in yield improvements and process technologies to strengthen the competitiveness of its Reinforcement Materials operations.