Oillion carbon black sales decline, but EBITDA profits increase significantly

In the first nine months of 2023, Houston-based O'Erilon has faced some challenges in the market for carbon black for rubber, in part due to a weakening in the heavy truck tire market and a strike by U.S. auto industry workers. In its recently released financial report, Orilon pointed out that its carbon black sales fell by 3% year-on-year in the third quarter of this year, with a total of 185,300 tons. During the same period, the company's net sales also fell 15.4% year-on-year to $316 million, largely due to the knock-on effect of falling oil prices and reduced sales.

Oerilong said that despite facing unfavorable market factors, it partially alleviated these impacts by adjusting contract prices. This move was reflected in the quarter, with adjusted earnings before interest, tax, depreciation and amortization (EBITDA) growing by 3.6% to $51.2 million. The company explained that this achievement was due to the optimization of contract prices, but part of the profit was offset by reduced sales and insufficient cogeneration efficiency.

It is understood that in the first nine months of 2023, Oilon's sales in the field of carbon black for rubber dropped by 5.4% year-on-year, with a total of 539,500 tons, and sales also dropped by 7.3% to US$964 million. However, adjusted EBITDA profit increased significantly by nearly 35% to $172 million. The company pointed out that this was mainly due to increased contract pricing, although declining sales and insufficient cogeneration efficiency still affected some profits.

Looking to the future, Mr. Corning Painter, CEO of Oerilon, expressed optimism. He believes that despite the current weak market demand for carbon black, the company is still expected to achieve profit growth for the third consecutive year. Pei Kangning emphasized that as tire production capacity in North America and Europe improves and more and more manufacturers tend to localize supply, it is expected to promote the growth of demand for carbon black. He also revealed that the company expects to complete user contract negotiations for its rubber business in Europe, Middle East and Africa (EMEA) and the Americas in 2024 next month.

Pei Kangning also mentioned that as the exhaust emission control system of the last factory in the United States is put into use, O'Erilong will shift the focus of capital expenditures to profit growth, reducing debt leverage and creating value for shareholders.