Berwyn, Pennsylvania – Trinseo SA's synthetic rubber segment has reported a decline in sales and profitability in the year 2019, despite growing demand for solution styrene butadiene rubber (SSBR).
For the full year, the segment reported 47% year-on-year decline in earnings (adjusted EBITDA) to $41 million (€37 million), on 23% lower sales of $441 million, Trinseo reported 7 Feb.
Over the fourth quarter of 2019, Trinseo’s synthetic rubber net sales fell 23% year-on-year to $100 million, due mainly to the pass through of lower raw material costs.
ESBR sales volume also declined due to “weak conditions and competitiveness in the market,” according to Trinseo.
These impacts were partially offset by a 4% increase in SSBR sales volume in the final quarter of the year.
Segment earnings for the quarter doubled to $12 million, helped by “favourable year-over-year net timing” as well as higher SSBR sales volume.
In a 7 Feb earnings call, Trinseo CEO and president Frank Bozich said his company expected SSBR demand to grow steadily in the coming months.
“Demand for SSBR has been very strong in Q1, or in January [2020]. It was very strong over Q4 [2019] run-rate,” said Bozich in the 2019 earnings call 7 Feb.
According to the company official, demand for high performance tires has grown three times the growth rate of standard tires over the last five years.
In addition, the US materials supplier believes the electrification of vehicles and fuel efficiency standards will accelerate this trend in the future.
“We are optimistic that the continued growth and performance tire and the replacement tire market in North America and Europe will continue to drive that [strong performance],” Bozich added.
SSBR, according to the company boss, comprised 65% of total synthetic rubber segment revenue in 2019 and its margins were typically two to three times those of emulsion styrene butadiene rubbers (ESBR).
