Orion partners with Contec for sustainable carbon black

HOUSTON - Orion Engineered Carbons S.A. (NYSE: NYSE:OEC), a global producer of specialty chemicals with annual revenue of $1.91 billion, has entered into a long-term supply agreement with Contec S.A., a move aimed at bolstering the production of environmentally sustainable carbon black using tire pyrolysis oil (TPO) from recycled tires.

The collaboration with Warsaw-based Contec will enable Orion to scale up the production of circular grades of carbon black to meet the increasing demand from major tire and rubber product manufacturers. This agreement marks a significant step in the company’s strategy to advance the circular economy by converting end-of-life tires into high-quality carbon black, a material commonly used for tinting and reinforcing rubber and plastic products.

Orion’s CEO, Corning (NYSE:GLW) Painter, emphasized the company’s commitment to sustainability, stating that the use of TPO is the only circular technology currently transitioning to industrial production for active carbon black. He highlighted Orion’s unique position as the only company to have produced circular carbon black from 100% TPO as a feedstock, demonstrating that these circular products can effectively substitute virgin carbon black in various applications. According to InvestingPro data, the company maintains strong operational performance with $230.7M in EBITDA over the last twelve months.

Krzysztof Wróblewski, CEO of Contec S.A., expressed the significance of this partnership, underscoring it as evidence of the industry’s evolution and the tangible reality of the circular economy through their collaboration with Orion.

Orion Engineered Carbons, with a heritage extending over 160 years, operates 15 plants globally and maintains four innovation centers. The company, currently valued at $779.8M, is recognized for its diverse production processes and its role as a leading innovator in delivering sustainable solutions tailored to customer needs. InvestingPro analysis suggests the stock is currently trading near its 52-week low of $13.32, with additional insights available in the comprehensive Pro Research Report, which covers over 1,400 US stocks.

On the other hand, Contec S.A. is renowned for its proprietary Molten® technology in tire recycling, which uses molten salt to efficiently process end-of-life tires into sustainable raw materials. Since 2017, Contec has been a pioneer in providing sustainable alternatives to traditional carbon black and petrochemical raw materials.

This agreement reflects both companies’ shared commitment to environmental stewardship and innovation in the specialty chemicals industry. The information in this article is based on a press release statement.

In other recent news, Orion Engineered Carbons has experienced a series of revisions to its financial outlook. Mizuho (NYSE:MFG) Securities reduced Orion’s price target from $18.00 to $17.00, maintaining a neutral rating. The adjustment comes after Orion’s forecast for its December quarter of 2024 adjusted EBITDA fell below previous guidance, with analysts now expecting it to be around $61 million.

Meanwhile, Jefferies analysts also lowered their price target for Orion from $26.00 to $24.00, while still holding a buy rating. The company’s projected EBITDA for 2024 is expected to be slightly below the initial forecast, citing various business challenges.

Contrarily, JPMorgan upgraded Orion from neutral to overweight, raising the price target to $21.00. This change comes despite a reduction in the 2024 earnings per share estimate for Orion from $1.90 to $1.65.

In addition, Orion reported a moderate increase in its adjusted EBITDA for the third quarter of 2024 during its earnings call. The company reported a 7% sequential and 4% year-over-year rise in EBITDA to $80 million, despite a decrease in overall volumes. These recent developments highlight the evolving financial outlook for Orion Engineered Carbons.

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