Orion Engineered Carbons reported a loss in second quarter due to lower demand caused by Covid-19. 

 

Company's net sales decreased by 49.2% year over year and stood at $202.6 million as against $399.0 million last year, driven primarily by lower volumes and, to a lesser extent, the effects of passing on lower feedstock costs to customers.

 

Loss from operations was $12.9 million compared to income from operations of $41.5 million in the second quarter of 2019, due to the effects of COVID-19 on the overall global economy and carbon black demand.

 

Lower volume drove a net loss of $17.8 million, compared to net income of $24.7 million in the second quarter of the prior year.

 

Adjusted EBITDA decreased by $56.3 million, or 78.7% to $15.2 million, year over year, primarily due to lower volume, partially offset by lower fixed costs and base price increases in the Rubber segment, in particular.

 

Corning Painter, CEO said "Our reported results reflected the effects of a 42 percent reduction in volumes caused by the abrupt reduction in global mobility induced by COVID-19, with Adjusted EBITDA of $15.2 million. We continue to focus on safety, building agility to serve our customers, reducing costs, and emerging stronger from this. We believe the long-range outlook for underlying carbon black demand remains strong and unchanged, but in the short run, we may benefit from a tailwind if driving continues to grow as a preferred mode of transportation during this period of stringent physical distancing. Indeed, miles driven proved to be a leading indicator of the nascent recovery of recent months."

 

Painter continued, “We cannot predict the ultimate course of COVID-19 or the ensuing pace and shape of the recovery in our end markets. However, we can see that current trends, such as the recovery in driving rates and auto sales from historic lows early in the second quarter, are very positive for us. As economies gradually reopen, we expect demand to continue to recover across our specialty and rubber carbon black end markets."

 

"We have successfully navigated through the first phase of this downturn and remain confident in our ability to deliver meaningful results for our customers, our employees, the communities where we operate and the shareholders whom we serve,” concluded Painter.