US Trinseo expects another net loss in Q1, may take more actions

Al Greenwood

12-Feb-2024

HOUSTON (ICIS)–Trinseo expects another quarterly net loss in the first quarter after reporting one on Monday for its fourth-quarter results.

The company has already shutdown some manufacturing capacity, and the company will continue to assess whether it should do more to “increase our manufacturing network flexibility”, said Frank Bozich, CEO.

Any such actions would allow the company to take advantage of cost differences among different regions while also improving profitability, lowering capital expenditures and optimizing working capital, Bozich said. At the same time, the moves would allow Trinseo to continue investing in higher-value products as well as sustainable ones.

The following table compares the company’s Q1 guidance to its Q4 and Q1 performance during 2023. Figures are in millions of dollars.

Q1 ’24 Q4 ’23 Q1 ’23
Net loss from continuing operations 77-67 265 49
Adjusted EBITDA 40-50 20 36

Source: Trinseo

“The unprecedented drop in demand we saw starting in the third quarter of 2022 has persisted, and a great deal of macroeconomic uncertainty remains,” Bozich said.

“We are seeing stronger order loads to begin the year following the challenges we faced in the fourth quarter, and therefore, we expect significantly higher sequential profitability in the first quarter of 2024,” he said.

However, the first quarter should be the one with the lowest profitability because volumes are typically lower during that time of the year and because of plant turnaounds, Trinseo said. Also, the timing of newly awarded business will contribute to lower profitability.

For all of 2024, Trinseo expects a similar constrained demand environment to 2023.

Shares of Trinseo rose by 1.63% in afterhours trading.

Q4 PERFORMANCE
The following table shows Trinseo’s Q4 performance. Figures are in millions of dollars.

Q4 23 Q4 22 % Change
Net sales 837.5 975.2 -14.1%
Cost of sales 817.2 978.4 -16.5%
Gross profit 20.3 -3.2
Net loss * 265.0 364.3 -27.3%
Adjusted EBITDA 20.2 6.3
*from continuing operations

Source: Trinseo

Trinseo makes styrenics and engineered materials.

Thumbnail shows spoons made of acrylonitrile butadiene styrene (ABS), one of the resins made by Trinseo. Image by ICIS.

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