Trinseo downgrades 2021 full-year guidance on energy pricing, production halt

LONDON (ICIS)–Trinseo has downgraded its expectations for full-year 2021 earnings and profits on the back of the sharp rise in natural gas pricing late last year and lost styrene production at its Terneuzen site in the Netherlands, the US-headquartered plastics and rubber specialist said on Monday.

The company projects that full-year net income for 2021 will stand at $279m-281m, compared to earlier guidance of $336m-376m, while fourth-quarter net income is expected to be as little as $1m.

Citing an “unprecedented” rise in European natural gas costs that outpaced the company’s capacity to pass on price increases and production losses at Terneuzen due to an upstream force majeure, Trinseo expects fourth-quarter net income from operations to be $1-3m, compared with $67m during the same period in 2020.

Full-year 2021 adjusted earnings before interest, taxes, depreciation and amortisation are expected to be $726m-732m, compared with earlier forecasts of $750m-800m.

Since the previous financial guidance was issued, the company has absorbed a hit of around $30m to net income from the sharp increases in natural gas pricing and $20m from Terneuzen.

The company halted styrene production at Terneuzen in December 2021 due to feedstock supply constraints arising from a Dow cracker outage, returning to normal output for styrene derivatives before the end of the year. Monomer production remains offline.

“While we implemented pricing actions in the fourth quarter, these were unable to keep pace with the unprecedented rise in natural gas prices that occurred late in the quarter,” said Trinseo CEO Frank Bozich.

“Despite this and the Terneuzen outage, we were still able to generate significant cash and returns to shareholders during the fourth quarter, while continuing on our path of transformation via the completion of our sale of the synthetic rubber business and the acquisition of plastics recycler Heathland,” he added.

Trinseo is projecting 2022 adjusted EBITDA of $700m-750m.

Picture source: Xavier Bonilla/NurPhoto/Shutterstock

Clarification: Recasts sixth paragraph to reflect that styrene derivatives production has resumed at Terneuzen. Styrene monomer production remains offline.