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Trinseo earnings surge YOY on higher volume, margins

February 04/2021

MOSCOW (MRC) -- Trinseo (Berwyn, Pennsylvania) reports net income for the fourth quarter of USD67 million, up tenfold from USD6 million in the year-ago period, on sales of USD860 million, down 3.3% year-over-year (YOY) from USD889 million, according to Chemweek.

Adjusted earnings per share came to USD1.84, up from $0.35 in the year-ago period and ahead of the consensus estimate of USD1.78 as compiled by Zacks Investment Research.

Lower prices, mainly on the pass through of lower raw material costs, resulted in a 10% decline in sales, partially offset by higher volume across all segments except feedstocks, says Trinseo. Higher net income reflected higher volume and margin, particularly within the polystyrene and base plastics segments, and a favorable pre-tax net timing variance of USD37 million.

Demand recovery in end markets like appliances and automotive in the second half of the year, as well as commercial excellence initiatives, resulted in robust earnings in the third and fourth quarters, says Frank Bozich, president and CEO. In fact, the fourth-quarter adjusted EBITDA was our highest result in over two years, and we ended the year in a very strong liquidity position.

Trinseo expects positive trends in volume and margins to continue in the first quarter. The company forecasts full-year 2021 net income of US167-200 million versus USD8 million for 2020.

The latex binders segment reported sales of $200 million, down 9% YOY on the pass through of lower raw material costs. Volumes increased slightly gains in CASE, textile, board and specialty paper applications were mostly offset by declines in graphical paper applications. Adjusted EBITDA was flat YOY at USD22 million as higher sales volume was offset by net timing.

The synthetic rubber segment reported sales of USD102 million, up 2% YOY. Higher solution and emulsion styrene-butadiene rubber (sSBR and eSBR) volume and favorable currency effects increased sales by 16% and 7%, respectively, but were mostly offset by lower pricing on raw material pass-through. Demand in the tire market was consistent with the third quarter. Adjusted EBITDA increased 33% YOY to USD16 million, with a favorable net timing variance of USD4 million and higher sales volume partially offset by lower fixed-cost absorption. Trinseo says it is still considering whether to divest the segment.

Sales in engineered materials totaled USD60 million, up 5% YOY on higher sales volume to consumer electronics applications in Asia and thermoplastic elastomer applications in Europe. Adjusted EBITDA increased 20% YOY to USD12 million, mainly on a 7% YOY increase in sales volume.

The Base Plastics segment reported sales of USD269 million, flat YOY as higher sales volume to automotive applications and favorable currency impacts were offset by lower pricing on raw material pass-through. Adjusted EBITDA increased 174%% YOY to USD52 million on higher acrylonitrile-butadiene-styrene (ABS), polycarbonate (PC) and compounding margins as well as higher sales volume.

Polystyrene (PS) sales totaled USD193 million, up 10% YOY on higher sales volume driven by continued strong demand into applications such as appliances, construction, and packaging. Adjusted EBITDA increased X% YOY to USD34 million on higher margins, particularly in Asia, higher sales volume, and a favorable net timing variance of USD9 million.

Feedstocks sales totaled USD36 million, down 47% YOY on lower styrene pricing and styrene-related sales volume. Adjusted EBITDA was USD15 million, up from a USD10 million loss in the year-ago quarter owing to higher styrene margins in Europe as well as a USD19 million favorable net timing variance.

Americas Styrenics adjusted EBITDA came to USD25 million, up 18% YOY on higher styrene volume and margin in North America, which reflected industry outages in the region.

As MRC reported earlier, Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, and its affiliate companies in Europe, have announced a price increase for all PS and ABS in Europe. Effective February 1, 2021, or as existing contract terms allow, the contract and spot prices for the products listed below rose as follows:

     - STYRON general purpose polystyrene grades (GPPS) -- by EUR40 per metric ton;
     - STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR40 per metric ton;
     - MAGNUM ABS resins - by EUR200 per metric ton.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.8 billion in net sales in 2019, with 17 manufacturing sites around the world, and approximately 2,700 employees.
Author:Margaret Volkova
Tags:Europe, North America, PC, PS, ABS, butadien, GPPS, styrene, HIPS, compounding, injection moulding, sheet extrusion, car components, natural rubber, Americas Styrenics, Trinseo (Styron), Russia, USA.
Category:General News
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