HOUSTON—The stock price of materials firm Kraton Corp. plummeted Oct. 10 after the company announced expectations of lower financial results for the third quarter.
Kraton's per-share price was near $21.10 in late trading Oct. 10, down almost 30 percent from its opening price on that date.
Houston-based Kraton will release full third-quarter results after markets close on Oct. 23.
In an Oct. 10 news release, President and CEO Kevin Fogarty said that despite opening the third quarter with "stable market indications," fundamentals including demand in China and broader Asia, and more recently in Europe and North America, "weakened notably" as the quarter progressed.
"This adversely impacted results for both our polymer and chemical segments," he added.
Officials added that sales of HSBC styrenic block copolymers in its polymers unit were impacted by continued demand deterioration in China and Asia, linked to ongoing trade tensions and tariffs.
HSBC sales in the third quarter also were affected by weakening demand in Europe, particularly for automotive and compounding applications, they said.
Polymer segment results also were affected by soft paving and roofing demand, which officials said reflected elevated customer inventories following a weak second quarter. "Ample supply availability" from market participants also contributed to "intensified competitive market conditions," they added.
Kraton's third quarter chemical results were affected by several factors, including lower prices for some key products. As a result of the impacts on both business units, officials now expect full-year adjusted earnings before interest, taxes, deducations and amortizatoin to be 10-15 percent below the lower end of previous guidance provided by the company.
"In response to what is now a more broad-based global economic slowdown, which we feel is unlikely to reverse course for the balance of 2019, we have taken proactive measures on cost management, cash flow optimization and capital allocation," Fogarty said.
Kraton's polymers are used in a wide range of applications, including adhesives, coatings, consumer and personal care products, sealants and lubricants, and paving and roofing applications. The firm posted sales of almost $2 billion in 2018.
The company will be at K 2019 in Duesseldorf, Germany, Oct. 16-23, at Hall 5, Booth D17.