Trinseo, a specialty material solutions provider, announced expectations for its fourth quarter 2022 financial results. Net loss from continuing operations and Adjusted EBITDA expectations include a pre-tax unfavorable net timing impact of $19 million from declining raw material costs as well as a $15 million unfavorable impact from natural gas hedges that were put into place in the second half of the year.

Commenting on the company’s fourth quarter performance, Frank Bozich, President and Chief Executive Officer of Trinseo, said, “Our fourth quarter results reflect a challenging operating environment including a continuation of customer destocking, lower underlying demand, and volume and margin impacts from lower-cost imports into Europe from Asia. As a result, our earnings and cash generation were below our previous expectations. However, due to proactive operating decisions such as idling styrene production throughout the fourth quarter, we saw a considerable sequential Adjusted EBITDA improvement of more than $40 million. Further improvement in the first quarter is expected given seasonally stronger demand, lower energy prices and the realization of our asset restructuring initiatives.”

In connection with the company’s annual goodwill impairment analysis performed in the fourth quarter, the company expects to record a non-cash impairment charge of $297 million related to the PMMA business and Aristech Surfaces reporting units' goodwill balances established in 2021.

The impairment charges were attributed to a challenging macroeconomic environment, including significantly lower demand for building & construction and wellness applications, which led to lower operating results including slower growth projections as well as a prolonged drop in market capitalization.

These impairment charges do not affect the Company’s cash position, and the Company remains encouraged about the businesses’ expected synergies and strategic value as we continue to evolve as a specialty material and sustainable solutions provider.

Bozich continued, “Despite the near-term challenges, we remain very optimistic about these businesses. Sales volume has been impacted by weak underlying demand and continued customer destocking. In addition, both volume and margins were pressured as elevated natural gas prices in Europe and low demand in China created an arbitrage window for lower-cost commodity products from Asia to be more heavily imported into Europe and North America. We view both of these as temporary circumstances which we believe will resolve themselves in the coming quarters.”