According to a report from the European Rubber Journal, Cabot Corporation, a U.S. company, has released its performance report, indicating strong profitability in its Reinforcement Materials business segment (mainly dealing with rubber carbon black and engineered elastomer composites, E2C) for the third quarter of this year. Cabot Corporation's performance report reveals that as of September 30, the third quarter of the calendar year, which marks the end of the fiscal year, the Earnings Before Interest and Taxes (EBIT) for rubber carbon black reached $134 million (approximately ¥956 million), showing a 23% year-on-year increase.
The carbon black supplier explains that this significant profit growth is mainly attributed to higher prices and an improved product portfolio negotiated with customers during the supply agreement signings for the 2023 calendar year, resulting in increased profit margins. During this fiscal quarter, growth in rubber carbon black sales in Asia, driven by China, offset a 7% decline in sales in the Americas and the Europe, Middle East, and Africa (EMEA) regions.
For the entire 2023 fiscal year, the revenue for the company's rubber carbon black business segment reached $482 million (approximately ¥3.43 billion), an 18% increase compared to the 2022 fiscal year. However, the sales volume amounted to $2.5 billion (approximately ¥17.8 billion), a 4% year-on-year decrease.
Looking ahead to the next year, Cabot Corporation's President and CEO, Mr. Sean Keohane, predicts a "low-single-digit growth" in business volume for the 2024 fiscal year. Agreements for 2024 are expected to involve higher pricing and an improved product portfolio. He further states, "We believe the destocking in key end markets has essentially ended. The Reinforcement Materials business segment's operating rates in the fourth fiscal quarter lay a solid foundation for next year's growth." Regarding costs, Cabot Corporation indicates that higher costs are expected to be partially offset by higher pricing and product portfolio improvements.
When evaluating the overall performance of the Reinforcement Materials business segment, Mr. Keohane attributes its "record performance" mainly to its "localized supply model." He explains, "Given the intensification of geopolitical tensions, many pressures have been placed on global supply chains, highlighting the increasing importance of supply security."
Mr. Keohane believes that the improvement trend in the company's performance over the past eight years reflects the long-term growth in demand for replacement tires and the "increasingly tight supply-demand balance in mature regions." He anticipates stricter restrictions on the import of Russian carbon black by the European Union starting in July 2024, further tightening the usage limits for Russian-produced carbon black in Europe.
The Cabot leader also points out that more stringent environmental regulations require manufacturers to make "significant emissions reduction investments" for sustainable supply to customers. These investments "add barriers to entry for additional capacity, roughly doubling the cost of new capacity and requiring a return on investment through price increases." Due to these factors, Mr. Keohane expresses confidence that the prospects for Cabot's rubber carbon black business are supported by "favorable long-term demand drivers and continuously growing innovation demands."