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Home | News |Trinseo Says HigherRaw Materials, Trade Uncertainty Hurt Third-Quarter Results
Trinseo Says HigherRaw Materials, Trade Uncertainty Hurt Third-Quarter Results
Updated: 2018-10-12 12:50 Source: chemweek share:

Trinseo's third-quarter adjusted EBITDA is expected to fall about 8% below the midpoint of previous guidance because of higher raw material costs, weaker tire demand, and lower demand due to “uncertainty of global trade dynamics.”

While feedstocks segment adjusted EBITDA for the third quarter is about $20 million higher than previous guidance, due to better-than-expected styrene margins in Europe and Asia, it was not enough to offset weaker results in latex binders, synthetic rubber, performance plastics, and polystyrene, Trinseo said. Third-quarter adjusted EBITDA is expected to fall $12 million below previously issued guidance of $150 million to $160 million.

“Third-quarter results were impacted by several adverse operating factors, including higher raw material costs, declining automotive production as well as market uncertainty in China from ongoing trade negotiations,” said Chris Pappas, Trinseo president and CEO. “We are actively evaluating and taking actions to address these challenges and are working to minimize impacts on our future results.”

Trinseo now expects to report adjusted earnings of $1.84–1.97/share, 9% below the midpoint of updated and previous guidance. Net income is expected to fall $15 million below previous guidance, with $9 million of the decline due to weaker operating performance and about $6 million from one-time expenses primarily related to a project to insource administrative services, Trinseo said. The updated net income forecast is roughly 16% below the midpoint of the previous guidance range of $88 million to $96 million.

Generally higher raw materials costs, a slowdown in the automotive industry, and continuation of a weaker tire market negatively impacted Trinseo’s third-quarter performance plastics and synthetic rubber results, leading to lower-than-expected sales volume and margin compression, Trinseo said. Operating results in latex binders, synthetic rubber, and performance plastics were negatively impacted by a reduction in customer demand, driven by the continued uncertainty of global trade dynamics as well as from customer destocking in anticipation of lower feedstock prices, the company added. “Our expectation going forward is that weakness in the automotive and tire markets, as well as the slowdown in China will impact our future results to the extent trade uncertainty persists,” Trinseo said.

The company will release full third-quarter results on 7 November.

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