LUXEMBOURG—Orion Engineered Carbons S.A. has posted a 25.6 percent increase in earnings (adjusted EBITDA) to $35.7 million for its rubber blacks business.
Industry demand for rubber carbon black remained strong in the three months to March 31, as sales volumes increased 4.3 percent to 217,000 metric tons, according to Orion's quarterly results statement. The business reported first quarter sales of $265 million, an increase of 27.4 percent.
Orion linked the higher volumes to increased demand in Europe, South Korea and China, though a "restriction of capacity" on standard rubber grade products impacted U.S. volumes.
Revenue gains, it noted, also reflected the pass-through of higher cost of feedstock to customers with index-pricing agreements, positive foreign exchange rate translation effects and base price improvements. These factors also buoyed earnings, as did the impact of improved cogeneration income resulting from a higher energy-pricing environment. Accordingly, gross profit per ton increased 13.6 percent to $269.20 in the first quarter, Orion said.
"Our markets have strengthened worldwide and helped drive revenue up by 25.5 percent with gains in both specialty and rubber volumes," CEO Jack Clem said of the firm's global performance.
"The stronger markets also supported price increases in both segments," he added. "While foreign exchange rates also favored revenue, the fundamentals of volume growth with stronger pricing were apparent in this good start to the year."
Clem also noted that Orion's rubber black production network was "pushed to near capacity and better pricing was indeed achieved, helped in part by a continued strong performance by our facility in China which managed to have a record quarter in spite of the challenges of a quite volatile feedstock market."
For the full-year, Clem expects Orion to build on its good start, helped by strengthening markets, company initiatives and foreign exchange developments. He raised the firm's overall outlook for 2018 adjusted EBITDA to between $280 million and $300 million.