Materials firm Trinseo has updated its financial guidance to show a larger expected loss for full-year 2022.
Officials with Trinseo in Wayne, Pa., said on Jan. 26 that the firm expects to post a loss of between $427 million and $432 million for the year. Previously, Trinseo had expected a loss of between $91 million and $126 million for that period.
Most of the increased loss expectation comes from the fourth quarter of the year, when Trinseo expects to post a loss of between $362 million and $367 million.
The fourth-quarter loss includes a pre-tax, non-cash goodwill impairment charge of $297 million related to the firm's PMMA (acrylic) and Aristech Surfaces reporting units. The impairment charges were attributed to "a challenging macroeconomic environment, including significantly lower demand for building and construction and wellness applications."
In a news release, President and CEO Frank Bozich said that Trinseo's 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," he added. Bozich also said that operating decisions such as idling styrene production in the fourth quarter produced a 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," he added.
"We remain very optimistic about these businesses. Sales volume has been impacted by weak underlying demand and continued customer destocking. … 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."
Trinseo had already announced several cost-cutting moves in December, including closing a styrene monomer plant in Germany and an acrylic sheet plant in Mexico. The firm's styrene plant in Böhlen, Germany, will be closed because of "an uncompetitive position in the global styrene market due to the site's subscale size, industry capacity additions and elevated natural gas prices in Europe."
Trinseo's acrylic sheet plant in Matamoros, Mexico, will also close, with production moved to a continuous sheet plant operated by the firm's Aristech Surfaces unit in Florence, Ky. Trinseo also is closing a polycarbonate resin line in Germany and reducing styrene butadiene latex production in Finland.
The PC line in Stade is being closed because of "an uncompetitive position in the global [PC] market." The firm will continue to make PC in Stade for use in its downstream compounding business. In Finland, Trinseo will reduce SB latex capacity in Hamina starting mid-year 2023 because of overcapacity of SB latex in Europe.
Trinseo will host a conference call to discuss further details of its fourth quarter and full year 2022 financial results on Feb. 9.
In the first nine months of 2022, Trinseo posted a loss of almost $66 million, after showing a profit of $316 million for the same period in 2021. Even with the loss, the firm's nine-month sales were up 13 percent to almost $4 billion in the same comparison.
On Wall Street, Trinseo's per-share stock price was down more than 1 percent to $26.40 in early trading Jan. 27. The price is up more than 13 percent since Jan. 1.
