A recent update from Orilon, an American company, highlights a mixed picture for its rubber carbon black business in the second quarter of 2024. Sales for the division surged to US311million(approximatelyRMB2.25billion),markinganotableincreaseof2.2 million from the corresponding period last year. However, this positive sales trend was overshadowed by a steep 18% year-on-year decline in adjusted earnings (EBITDA) to US$47 million (around RMB 340 million).
The culprit behind this earnings downturn lies primarily in waning demand for rubber carbon black in both the Americas and Asia. This translated into a 2.0% decrease in quarterly production, with a shortfall of 3,500 tons compared to the previous year. Additionally, Orilon cites escalating fixed costs as a significant contributor to the profit squeeze.
Turning our attention to the broader first-half performance, Orilon's rubber carbon black output edged up by a modest 0.3%, with an incremental 1,100 tons bringing total production to 355,000 tons. Contrastingly, sales figures lagged behind, dipping by US4.5million(0.7643.5 million (around RMB 4.46 billion).
The division's adjusted earnings fared no better, plummeting by US16.7million(13.8104.5 million (around RMB 757 million) over the six-month period. The decline was exacerbated by a combination of surging fixed costs and a sales slowdown in the Americas, though an uptick in European production and favorable contract pricing offered some respite.
Navigating a global landscape characterized by sluggish demand and macroeconomic uncertainties, Orilon's CEO, Corning Painter, remains steadfast in his assessment of the rubber industry's profitability, which he deems as relatively stable despite the challenging external environment. He underscores the company's commitment to adapting to market dynamics and ensuring continuous business growth.
Echoing this sentiment, Chief Financial Officer Jeff Grajic acknowledges the company's "unusually high cogeneration earnings" last year, which have set a high benchmark for this year's performance comparisons. Nevertheless, Orilon remains optimistic, anticipating a reversal of fortune in the second half of 2024. With improved plant utilization rates, the company aims to bolster profitability and mitigate the ongoing weakness in the rubber market.