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Investing.com -- S&P Global Ratings has revised its outlook for Olin Corp to negative from stable, citing persistently weak credit metrics with no signs of near-term demand recovery.
The rating agency expects Olin to end the year with funds from operations (FFO) to debt well under 20% and debt to EBITDA exceeding 4x. All three of the company’s business segments are facing challenging demand conditions, with little improvement expected in coming quarters.
In the chlor alkali products and vinyls segment, which is Olin’s largest business unit, EBITDA has declined approximately 9% year to date due to lower pricing and higher raw material costs, partially offset by higher volumes from improved operating rates. Despite substantial operating leverage in this segment, S&P believes operating rates are unlikely to rise in the near term given the continued slowdown in housing starts and weak demand in key markets.
The epoxy segment is projected to remain EBITDA-negative for a second consecutive year in 2025, though improvement is expected in 2026 from contractual cost savings at Stade ($40 million), potential benefits from supply rationalization by European competitors, and incremental tariffs and duties.
Olin’s Winchester ammunition segment has experienced the most dramatic deterioration in 2025, with EBITDA down 58%. The sector faces weak consumer demand and high channel inventory, making it difficult to pass on rising copper and propellant costs. EBITDA margins in this segment have fallen to mid-single digits from over 20%, and S&P expects them to remain at this level at least into 2027.
Overall, S&P forecasts Olin’s adjusted EBITDA at approximately $775 million in 2025 and just over $800 million in 2026, with marginal growth underpinned by improved epoxy profitability and continued strength in Winchester’s military business.
The rating agency noted that Olin has prioritized share repurchases over debt reduction even as credit metrics weakened. Over the past three years, the company generated about $1.3 billion in cumulative free cash flow and returned about $1.4 billion to shareholders, while gross debt increased by $400 million.
S&P could downgrade Olin if chlor alkali demand weakens further, resulting in weighted-average FFO to debt remaining below 20%. This could occur if global economic growth is weaker than expected, interest rates remain elevated longer than assumed, or U.S. housing starts fall in 2026.
The outlook could be stabilized if end-market demand for chlorine derivatives improves materially while Winchester’s commercial business stabilizes, allowing FFO to debt to remain above 20%. This would require adjusted EBITDA to exceed $800 million, along with financial policies that support the current ’BB+’ rating.
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