Orion reviewing production network as rubber blacks earnings improve

Houston, Texas – Orion Engineered Carbons has announced a review of its global production network amid continued weakness in tire manufacturing

The announcement came as the US carbon black supplier reported a 15% year-on-year increase in third-quarter adjusted earnings (EBITDA) for its rubber carbon black business.

Adjusted earnings for the three months to end of September increased to $41.4 million from $36.1 million a year earlier, the company reported 4 Nov.

Net sales for the three months ended 30 Sept rose 5% year-on-year to $306.4 million, compared with $290.9 million in the prior-year period.

The increase reflected a 16% favourable pass-through effect from higher oil prices, partly offset by 4% lower volumes in the Americas and Asia Pacific regions.

Sales were also affected by 4% "lower pricing" under the company's 2026 annual contract agreements and a 3% "unfavourable customer mix".

Orion said the improvement in adjusted earnings was driven primarily by a combined $21.3-million benefit from higher raw-material cost pass-through and the timing of European emissions allowances.

This was partly offset by $10.6 million in lower contractual pricing and $7.9 million from an "adverse regional mix".

Commenting on market conditions, CEO Corning Painter said "moderating tire imports have not yet led to a tangible recovery in local tire manufacturing" in North America and Europe.

"Therefore, we are taking additional measures to drive improved performance," he said.

These include "an evaluation of our overall production network, with a focus on underperforming assets."

Orion did not identify the facilities under review or specify whether the evaluation could lead to further production closures.

For the first nine months of the year, the group reported rubber carbon black sales of $912.3 million, broadly unchanged from $916.2 million a year earlier.

Adjusted earnings for the nine months ended 30 Sept, however, declined 36.7% year-on-year to $79.6 million from $125.8 million.

Speaking during a 5 Nov earnings call, CFO Jonathan Puckett said Orion expected "subdued" rubber carbon black results in the fourth quarter, citing lower contractual pricing, seasonal weakness and planned maintenance costs.

For 2027, Puckett pointed to opportunities from improved plant reliability, feedstock sourcing initiatives and continued strength in the spot market, particularly in North America.

Commenting on the ongoing negotiations for 2027 rubber carbon black supply contracts, CEO Painter said Orion was pushing for "a fair price" and could withhold some volumes from annual contracts if agreement could not be reached.

"We can just hold back some and play the spot market," said Painter during the earnings call, adding that he expected spot demand to remain "pretty robust" next year.