BERWYN, Pa.—Trinseo S.A. is on track with the evaluation of its synthetic rubber business by mid-year and expects to divest the unit to further focus on engineered materials, according to president and CEO Frank Bozich.
"I feel very good about our process. We've had a lot of interest from parties in the market and it's a great franchise," he said during a first quarter conference call on May 7.
"We believe that there are other parties in the market who are better able to invest and grow synthetic rubber and (with the divestment) our asset ... (will) have a third growth platform within the company," he said.
The decision to sell the SR unit comes as the business posted growth in the first quarter of 2021. Trinseo's SR sales grew 22 percent to $124 million in the first three months of the year, due primarily to higher volumes.
The unit particularly witnessed growth in solution styrene butadiene rubber sales, which posted "highest quarterly volume in nearly three years." Trinseo attributed the SSBR hike to "growth initiatives" and a recovery in the tire market.
The segment's adjusted EBITDA fell 6.6 percent to $14 million as higher sales volume was more than offset by a prior year inventory build and an unfavorable net timing impact.
The business manufactures solution SSBR and emulsion styrene-butadiene rubber at its manufacturing hub in Schkopau, Germany.
Trinseo's official production capacity for SSBR is 200,000 metric tons and 130 tons for ESBR.
In 2019, the U.S. group's rubber segment reported adjusted EBITDA of $41 million and sales of $441 million.
The potential divestment of the business comes at a time when Trinseo is reinforcing its focus on plastics.
The group acquired Arkema's PMMA plastics and activated methyl methacrylates business on May 3 to strengthen focus on "advanced materials and sustainable solutions."
Last November, Trinseo announced a restructuring plan at its performance plastics segment, dividing the unit into two separate reporting segments: engineered materials and base plastics.