BERWYN, Pa.—A slowdown throughout the tire market has prompted Trinseo S.A. to take cost-cutting measures, including a reduction in force in its synthetic rubber segment. The news came as the Berwyn-based firm said its fourth-quarter 2018 results likely will fall short of its previously issued guidance.
The firm estimated that its fourth quarter will be between a loss of $3 million or a net profit of $1 million. Trinseo said adjusted EBITDA should fall between $63 million and $67 million, the company said in a news release.
Declining feedstock and raw materials prices were among the factors that negatively impacted Trinseo in the fourth quarter, accounting for about $28 million. The company said that was compounded by the unplanned shutdown of a styrene plant in Terneuzen, Netherlands, in December. The plant reopened earlier in January, but Trinseo estimates that the closure cost the firm about $7 million.
Trinseo did not provide specific details about the work force reduction plans, but said in its statement the move should save about $2 million in 2019 and $3 million each year after. A pre-tax charge of about $5 million will be incurred during the fourth quarter as a result of this action.
"We remain committed to providing innovative technologies and solutions to serve the performance tire market," outgoing president and CEO Chris Pappas said in statement, "but this restructuring action is a necessary step to more closely align the cost structure of synthetic rubber with the current tire market environment."
Trinseo is expected to release its fourth quarter financial results on Feb. 13.