Orion Engineered Carbons CEO on Success of Its Specialty Business

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Tuesday, August 9, 2016 4:08 pm CDT

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Shares of Orion Engineered Carbons (OEC) are deep in the black, up 37% year to date. Its CEO Jack Clem said he expects the good times to continue -- and volumes to remain strong -- in the second half of 2016.

"We had spectacular performance from our specialities business in the second quarter and our rubber business saw substantial volume growth on the heels of our acquisition in China," said Clem. "As the economy improves, so should our volumes the rest of the year."

Last week, Orion reported its strongest results ever as a public company. The leading producer of specialty carbon black (used in coatings, polymers and inks) and rubber carbon black (primarily used for tire manufacturing) reported second-quarter earnings of $18.6 million, or 40 cents per share after adjustments on sales of $280 million. Orion's results exceeded Wall Street expectations of 36 cents per share.

In its specialty business, the company said it is continuing to shift its product mix to more high value-added premium grades, leveraging its expanded product portfolio and geographic reach. Orion operates in more than 90 countries with more than 1,500 employees operating 15 global production sites and four technology centers.

Orion said it grew volume by approximately 12% in its second quarter, marking its third consecutive quarter of double-digit growth. Organic growth in the second quarter, that is excluding the sales volume from the Chinese business purchased last year, totaled 6.5%.

Specialties had a record-setting quarter across every critical metric, according to Clem. Volumes in the quarter increased 15.9% to a record 63.4 kilotons vs. 54.7 kilotons in the prior year with gains occurring at all geographic regions, in practically all sub-segments, of the business.

European demand this quarter was not dimmed by Brexit worries. Clem said it was fueled by "robust auto-build and recovering sales of replacement tires."

Finally, Russian and Chinese carbon black imports into Orion's markets declined in the past few months alleviating strong competitive pressure. The company also had several variable cost savings initiatives that started earlier this year to offset raw material cost impacts, which, according to Clem, will begin to show effect in the coming quarters.

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Orion Engineered Carbons S.A.
6, Route de Trèves
L-2633 Senningerberg (Municipality of Niederanven)
Grand Duchy of Luxembourg
Phone: +352 270 48 06 0

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