BOSTON—Cabot Corp.'s reinforcement materials segment saw sales decline in the second quarter as the COVID-19 pandemic took hold. And the company is taking that as a sign of even more significant impacts to come.
Sales for the three months to end of March came in at $355 million, down 20 percent year-on-year, due to 14 percent volumes decline, particularly in Asia.
Segment earnings remained flat at $61 million during the quarter, helped by higher margins and pricing/mix effects both in the industrial and tire sectors. The impact was "most pronounced" in Asia during the quarter, Cabot said, but the Americas region, as well as Europe, Middle East and Africa region, also were affected.
"Looking ahead to the third quarter, we expect results in reinforcement materials to be severely impacted by COVID-19 as the temporary tire and auto customer shutdowns in Europe and the Americas will significantly impact volumes," said CEO and President Sean Keohane in an earnings call.
In addition, the company expects Asia Pacific volumes to be weak as a significant part of that region's tire production is export related, Keohane said.
Mean while, second quarter volumes were down 13 percent in Europe and 8 percent in America, following the spread of COVID-19 to the regions in late March, Keohane said.
The company expects volumes in the third quarter to be down in the range of 40 percent as compared to the same quarter last year.
Cabot also anticipates margins and profitability in the segment to be "unfavorably impacted by the rapid drop of feedstock prices," Keohane said.