Avient lowers 2022 earnings expectations on less demand

AVON LAKE, Ohio—Lower demand and the impact of recent deals have led materials maker Avient Corp. to lower its earnings expectations for the third quarter and the remainder of 2022.

The firm's adjusted earnings per share guidance for full year 2022 has been reduced by 30 cents to reflect weaker demand conditions and unfavorable foreign exchange, officials with Avon Lake-based Avient said in a Sept. 27 news release.

"The war in Ukraine and related energy supply concerns have further eroded consumer sentiment and demand in Europe, and we have not seen a recovery in Asia from the COVID-19 lockdowns in the first half of the year," Chairman, President and CEO Robert Patterson added.

He also said that the economic environment "is further challenged by rapidly rising interest rates in the U.S., which have negatively impacted demand trends in the Americas" and that "in the near term, we believe current global demand is likely further weakened by customer inventory destocking."

Avient also has been involved in two major deals recently. The firm bought the Protective Materials business of DSM—including Dyneema high-strength fiber—and is selling its resin distribution unit, which ranks as one of the largest in North America.

The acquisition of the DSM unit for almost $1.5 billion closed Sept. 1. The $950 million sale of the distribution unit to private equity firm HIG Capital of Miami is expected to close in the fourth quarter. Officials said that Avient will use net proceeds from the distribution sale to pay down its 2023 Senior Notes and a portion of the term loan.

Avient has updated its projections to include the DSM business and to present the distribution unit as discontinued operations. Patterson described the deals with DSM and HIG as "the most recent steps in our multi-year portfolio transformation to becoming a pure play specialty formulator."

Looking ahead, Patterson said that "most importantly, (Avient) has not wavered from our strategy of becoming a specialty formulator."

"Over the last few years, we have overhauled our portfolio despite the unprecedented impacts of COVID, the war in Ukraine and resulting supply chain issues and inflation," he added. "We have divested more cyclical, less specialized businesses and made significant investments in innovation, composites and sustainable solutions. We remain confident in the long-term growth potential of our new portfolio."

In the second quarter, Avient posted improved sales and profit totals. Sales for the quarter were up 5 percent to $1.3 billion when compared to the same quarter in 2021. Its quarterly profit was up 22 percent to $84.7 million in the same comparison.

On Wall Street, Avient's per-share stock price was down almost 1 percent to $32.60 in early trading Sept. 27. For the year, that number is down about 42 percent.

Avient is one of the world's largest concentrate makers and one of North America's largest compounders. The firm employs more than 8,000 worldwide and posted total sales of $4.8 billion in full-year 2021.