Ou Lilong's profit of special carbon black remained unchanged in the first half of the year, and the rubber carbon black market showed weakness

Ou Lilong recently disclosed its results report for the first half of 2024. According to the report, sales increased by 20.7 kmt to 481.5 kmt, mainly due to strong sales in the specialty carbon black division. Net sales were $979.9 million, a year-on-year increase of 2.1%(an increase of $20.4 million), driven mainly by increased sales in the specialty carbon black business and improved contract pricing. Net income was US$47.2 million, a year-on-year decrease of 34.8%(a decrease of US$25.2 million); operating income fell 38.0% or 28.7% year-on-year to 94.4%. Adjusted EBITDA was $160.4 million, a year-on-year decrease of 14.9%(a decrease of $28 million).

In the second quarter of 2024, sales performance in the specialty carbon black field was particularly outstanding, with a year-on-year increase of 17.4% to 62.9 kmt. Net sales also achieved a 10.7% increase to US$165.5 million, mainly due to the overall increase in sales across regions and end markets. In contrast, sales in the rubber carbon black division fell slightly by 2% year-on-year due to declining demand in the Americas and Asia. According to the Carbon Black Industry Network, Ou Lilong's special carbon black sales volume reached 126.2 kmt in the first half of 2024. The growth mainly benefited from the recovery of demand in various regions and end markets. Sales of rubber carbon black were 355.3 kmt, a slight increase of 0.3% year-on-year.

Commenting on the results, Orilon CEO Corning Painter said that despite the challenges of weak demand in the rubber sector and complex global macroeconomic trends in the second quarter of 2024, the continued recovery of earnings in the specialty sector is encouraging, achieving double-digit sales growth, and the profitability of the rubber sector has also remained relatively stable. He also expressed confidence in the improvement of industry fundamentals and the sustainability of the company's medium-term profit trajectory. Chief Financial Officer Jeff Glajch added that the appearance of quarterly results was affected by abnormally high cogeneration revenue in the same period last year. Despite the weak rubber market, the company expects profitability to improve in the second half of 2024 due to improved factory utilization.

Mr. Painter also revised his 2024 performance guidance, predicting adjusted EBITDA to range between $315 million and $330 million. Given the current considerable uncertainty, he does not expect the economic environment to improve significantly for the rest of 2024.