Berwyn, Pennsylvania – Trinseo SA’s synthetic rubber (SR) business has reported a double-digit decline in first quarter sales due in part to Covid-19.
Over the three months to end of March, segment’s sales fell 18% to $102 million (€94 million) while earnings (adjusted EBITDA) grew 36% to $15 million.
The company linked the decrease in sales to a volume decline of 8% as customers cancelled solution styrene butadiene rubber (SSBR) orders due to Covid-19 impact.
In addition, revenue was impacted by a price decline of 7%, mainly from the pass through of lower raw material costs.
Segment earnings experienced a pretax $6 million headwind due to Covid but was higher than the year before due mainly to “favourable year-over-year net timing” and increased fixed cost absorption.
Trinseo expects the decline in sales to continue in the second quarter and the SR business' sales to come in 50% lower than the year before.
“Looking at the start of the second quarter, the decline in demand that began in late March has accelerated in April particularly in the automotive, tire and textile markets,” said president and CEO Frank Bozich in an earnings call 7 May.
According to the company official, April automotive production was 95% lower in both Western Europe and North America due to the large number of plant closings.
Tire demand, he noted, was down 60% year-over-year in April, but the company is seeing "an improved order flow for May.”
“May is certainly significantly better than April was, and we are already seeing bookings for June,” Bozich noted.
Comments in transcript sourced from Seeking Alpha.