Materials firm Trinseo is looking to recover from a challenging 2023.
Wayne, Pa.-based Trinseo posted sales of a little less than $3.7 billion for 2023, down 26 percent vs. 2022. The firm also posted a loss of $701.3 million after losing $430.9 million the previous year.
Sales at Trinseo's Plastics Solutions unit, including polycarbonate resins, were down 21 percent to just over $1 billion. At the firm's Polystyrene unit, not counting its Americas Styrenics joint venture, sales were down 32 percent to a little more than $743 million.
During a Feb. 13 conference call, President and CEO Frank Bozich said first-quarter 2024 demand for Trinseo's products "is up, but it's too early to tell if it's the end of destocking or orders that shifted from the fourth quarter [of 2023] to the first quarter." Also in the first quarter, Trinseo will open an acrylic depolymerization plant in Rho, Italy.
In a news release, Bozich added that, as expected, Trinseo "had sequentially lower results in the fourth quarter, as more pronounced seasonality and continued customer inventory management and destocking led to a challenging end to the year."
"As we enter 2024, we are seeing the positive impact of our restructuring initiatives taking effect," he said. "I would like to thank our employees for their perseverance during what has been one of the most challenging years our industry has faced in several decades."
For the year, Trinseo's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were down 2 percent in Plastics Solutions, down 66 percent in Polystyrene and down 39 percent at Americas Styrenics.
Trinseo has made major changes to the shape of the firm during the last 18 months in an attempt to improve profitability. In 2023. The firm closed acrylic sheet plants in Belen, N.M.; Bronderslev, Denmark; and Rho, Italy.
Trinseo also closed a styrene monomer plant in 2023 in Terneuzen, Netherlands. The firm now purchases all of its styrene needs from third party suppliers to support its downstream businesses. The combined plant closings eliminated about 165 jobs and are expected to create annual cost savings of about $75 million.
Between mid-2022 and mid-2023, Trinseo also sold an acrylic sheet plant in Mexico to Plaskolite LLC, closed a styrene monomer plant and a polycarbonate resin line in Germany and reduced styrene butadiene latex production in Finland.
In the conference call, Chief Financial Officer David Stasse said if Trinseo had remained in the styrene business, the firm would have had "significant losses." He added Trinseo and other materials firms are seeing "significant margin deterioration" in PC, ABS and PS, due in part to overcapacity for those materials in China.
"I spent the last two weeks in Asia visiting our clients," Stasse said. "All of our Chinese customers are expecting no domestic demand growth in 2024. The only growth they're planning for is of exports into Europe."
In 2022, Trinseo had attempted to sell off all of its styrenics units, but was unable to find a buyer. Bozich said during the conference call that "nothing was imminent" on a potential sale, but that the firm "continues to field questions and interest on specific assets."
Looking to 2024, Bozich said in the news release the unprecedented drop in demand that Trinseo saw starting in the third quarter of 2022 "has persisted, and a great deal of macroeconomic uncertainty remains."
Amid this environment, he added the firm "has executed numerous manufacturing footprint and other cost reduction initiatives," while extending the majority of its debt maturities out to 2028.
"While we are already seeing the benefits of these initiatives, we will continue to assess additional actions in 2024 to increase our manufacturing network flexibility," Bozich said.
Trinseo employs 3,100 worldwide. On Wall Street, the firm's per-share stock was down 25 percent to $4.60 in early trading Feb. 13. The price had been above $10 as recently as September.