Orion cuts 2025 outlook amid weaker demand, shifts to cash focus

HOUSTON - Specialty chemicals company Orion S.A. (NYSE:OEC), trading near its 52-week low of $6.84 compared to its high of $19.48, lowered its full-year 2025 earnings guidance on Monday, citing weakness in Western tire manufacturing and inventory adjustments that impacted third-quarter performance. According to InvestingPro data, the stock has declined over 61% in the past year, with multiple analysts recently revising earnings expectations downward.

The carbon black producer expects preliminary third-quarter adjusted EBITDA of approximately $55 million and has revised its full-year adjusted EBITDA forecast to between $220-$235 million, according to a company press release. The company operates with a significant debt burden, with a debt-to-equity ratio of 2.47 and total debt of $1.15 billion as of the latest quarter.

Orion said it has reduced production levels in response to continued weakness in Western tire industry manufacturing rates, which the company attributes to elevated imports. The production cuts are part of an intensified focus on generating free cash flow for debt reduction.

"We continue to believe the evolving global trade paradigm, including U.S. tariff policy, will ultimately be a positive for our business with its inherently more regional footprint, but this has not been the case for 2025," said Corning Painter, Orion’s Chief Executive Officer.

The company cited several factors affecting third-quarter results, including lower Rubber volumes in Western markets, oil price-driven inventory revaluation, inventory drawdown efforts that affected fixed cost absorption, and adverse Specialty mix.

Despite reduced earnings expectations, Orion still anticipates generating positive free cash flow this year, pointing to "substantial progress" on working capital initiatives during the third quarter. The company plans to introduce additional cost measures to improve earnings and cash flow generation in 2026.

Orion will release its complete third-quarter 2025 financial results after market close on November 4, followed by a conference call on November 5.

The company operates 15 carbon black production plants worldwide, supplying materials used in tires, coatings, ink, batteries, plastics and other specialty applications. InvestingPro analysis indicates the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of this and 1,400+ other US stocks.

In other recent news, Orion Engineered Carbons reported its financial results for the second quarter of 2025, which fell short of expectations. The company posted earnings per share of $0.32, missing the projected $0.37, resulting in a negative surprise of 13.51%. Revenue also came in below forecasts at $466.4 million, compared to the anticipated $473.35 million, marking a shortfall of 1.47%. Additionally, Mizuho downgraded Orion Engineered Carbons from Neutral to Underperform, citing concerns related to tire imports and setting a price target of $9.00. Despite this, Jefferies maintained a Buy rating on the stock but lowered its price target to $14.00 from $15.00, pointing to near-term demand headwinds. These developments highlight the challenges Orion is currently facing amid fluctuating market conditions.

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