Trinseo restarts effort to sell styrenics business

WAYNE, Pa.—Materials firm Trinseo is restarting the sales process for its styrenics business and changing strategy to include marketing individual assets and regional businesses included in that unit.

Officials with Trinseo in Wayne, Pa., announced that change in a May 4 news release that included the firm's first-quarter financial results. During 2022, Trinseo attempted to sell its styrenics business, but ended those efforts in July because of unfavorable economic conditions.

When the sale was paused, President and CEO Frank Bozich said that "while the separation of the styrenics business is part of our transformation strategy, the current economic and financing environments make it challenging to get a value for the assets that is reflective of their significant cash generation."

Trinseo units covered by the sale are polystyrene resin plants in Belgium, Germany, Hong Kong and Indonesia and styrene monomer plants in Germany and the Netherlands. It's unclear how the change in strategy would affect Trinseo's 50 percent ownership of North American PS maker Americas Styrenics L.L.C., which was included in the original sales attempt.

AmSty—based in The Woodlands, Texas—is a joint venture between Trinseo and Chevron Phillips Chemical Co. The firm is one of North America's largest PS makers, operating five PS resin plants in the U.S., as well as one in Colombia and a stryrene monomer unit in St. James, La.

In the first quarter of 2023, Trinseo reported sales of just under $1 billion, down 27 percent from the same quarter in 2022. The firm posted a first-quarter loss of $49 million after showing a $17 million profit in the year-ago period.

For the quarter, sales in Trinseo's Engineered Materials unit, including acrylic resin and sheet, were down 30 percent to $206 million. The unit showed negative adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $12 million, down from $35 million in earnings in 2022.

Trinseo's Plastic Solutions unit, including polycarbonate and ABS, saw first-quarter sales decline 27 percent to $289 million, with adjusted EBITDA plunging 62 percent to $26 million.

Trinseo's PS unit, not including AmSty, saw sales for the quarter drop 34 percent to $209 million, with adjusted EBITDA down 64 percent to $16 million. Adjusted EBITDA for AmSty was down 18 percent to $18 million.

In the release, Bozich took a positive approach, saying that Trinseo's operating results "improved significantly due to lower costs as well as our asset restructuring actions."

"We generated positive free cash flow in this challenging environment as we implemented numerous liquidity improvement actions including working capital reductions," he added.

Looking to the rest of the year, Bozich said that Trinseo anticipates results "will significantly improve" in the second quarter from lower raw material and corporate costs, better fixed cost absorption and a lower natural gas hedge loss. "Despite the economic environment, we are taking actions to improve our cash and liquidity profile," he added.

Last month, Trinseo sold an acrylic sheet plant in Matamoros, Mexico, to Plaskolite L.L.C. The firm also recently closing a styrene monomer plant and a PC resin line in Germany and reduced styrene butadiene latex production in Finland.

For full-year 2022, Trinseo lost almost $431 million after showing a profit of $440 million in 2021. The firm's sales were up almost 3 percent to almost $5 billion. Officials had warned investors of the substantial loss in late January. Previously, the firm had expected a loss of no more than $126 million for the year.

On Wall Street, Trinseo's per-share stock price began 2023 at $23.50 but was at $17.50 in early trading May 5 for a loss of 25 percent so far in 2023.