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Olin earnings tumble on weak demand, maintenance outages

August 06/2020

MOSCOW (MRC) -- Olin Corporation (Clayton, Missouri) reports a second-quarter net loss of USD120 million, down from a net loss of USD20 million in the year-ago quarter, reflecting weak demand and maintenance outages on the chemical side, reorted Chemweek.

Adjusted EBITDA totaled USD71.5 million versus USD205 million in the year-ago period. Sales totaled USD1.241 billion, down 22% year-over-year (YOY) from USD1.593 billion.

Adjusted earnings per share came to a 60-cent loss, down from breakeven in the year-ago period and short of the average analyst estimate of a 49-cent loss as compiled by Refinitiv (New York).

Second quarter 2020 sales for the combined chlor-alkali products and vinyls and epoxy businesses declined year-over-year by approximately 27%, says John E. Fischer, chairman, president, and CEO. The sales decline reflects weaker customer demand and a high level of planned maintenance turnaround activity which occurred early in the second quarter. Overall chemical businesses sales increased each month during the quarter from the April low point and have continued to increase during July.

Fischer expects third-quarter adjusted EBITDA to double that of the second quarter owing to lower maintenance turnaround costs, improved sales volumes, and higher product pricing.

Chlor-alkali products and vinyls sales totaled USD651 million, down 28% YOY from USD909 million. Segment earnings came to a USD57 million loss, swinging from profit of USD71 million in the year-ago period. Fischer cites weaker broad-based customer demand from almost all end-use chemical customers. Shipments to our urethane customers were particularly weak and declined by approximately 44% compared to first quarter 2020, he says. Caustic soda pricing increased sequentially by about 8%, while ethylene dichloride pricing declined sequentially by about 50%. Olin expects pricing to improve during the third quarter, and for volume to increase owing to lower maintenance turnaround activity.

Epoxy segment sales totaled USD397 million, down 24% YOY from USD519 million, mainly on roughly 30% lower epoxy resin volume and lower product prices. The segment recorded a loss of USD13 million compared to earnings of USD4 million in the year-ago period. Lower product prices and lower epoxy resin volumes were partially offset by lower raw material costs, primarily benzene and propylene, and lower operating costs, says the company.

The Winchester ammunition segment turned in sales of USD193 million, up 17% YOY from USD165 million on higher commercial ammunition sales. Segment earnings were USD16 million, up from USD10 million in the year-ago period, mainly on higher commercial ammunition volumes and pricing.

As MRC informed earlier, in December 2019, Olin Corporation announced that it plans to permanently shut down a chlor alkali plant with a capacity of 230,000 tons and its Vinylidene Chloride (VDC) production facility, both in Freeport, Texas. These closures are expected to be completed before the end of 2020. 

As MRC also reported before, May production of sodium hydroxide (caustic soda) in Russia was 112,000 tonnes (100% of the basic substance) versus 101,000 tonnes a month earlier. Overall output of caustic soda totalled 543,000 tonnes in the first five months of 2020, up by 1.4% year on year.
Author:Margaret Volkova
Tags:kausticheskaya soda, petrochemistry, adhesives, Olin Corporation, Russia, USA.
Category:General News
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