BERWYN, Pa.—Weakening tire and automotive market demand has hit Trinseo, which reported lower net sales and earnings.
Trinseo said its synthetic rubber business shrank over the first three months of 2019, mainly due to lower styrene butadiene rubber sales volumes.
Segment sales fell 16 percent year-on-year in the first quarter to $125 million on lower volumes and negative currency factors, the company said in its first quarter financial report.
Earnings (adjusted EBITDA) at the rubber unit fell by 65.4 percent, to just under $9 million, compared to the first quarter of 2018. Trinseo linked lower volumes in solution SBR (SSBR) and emulsion SBR (ESBR) to a global slowdown in vehicle production and weakness in European and Asian tire markets
The company also reported lower margins on ESBR polymers on greater supply availability in Europe as Asia exports declined.
The latest results follow an 8 percent decline in earnings for the full year 2018 to $77 million at Trinseo's rubber business on sales down 2 percent to $572 million.
"While we have seen signs of improved demand across some of our markets, the automotive and tire markets remain weak, as do many of the end markets in China into which we sell," Frank Bozich, Trinseo CEO and president, said in a statement. "Amid these conditions, we have initiated a number of working capital and cost initiatives to improve operating results."
Late last year, Trinseo launched a restructuring program at its rubber business, aiming to reduce costs by about $2 million in 2019, and $3 million per year thereafter.
Meanwhile, net sales of $224 million in the latex binders represented a 12 percent decline when compared to the prior year period. Volume increased driven by demand in the North American and European paper, board and carpet markets. These gains were offset by the Asian market, where Trinseo said a customer experienced an outage.