On June 20, vinyl chloride monomer and epoxy resin maker Olin announced adjusted second quarter financials, adjusted EBITDA for the second quarter of 2023
It is expected to be between $350 and $360 million. This figure was lower than previously expected, mainly due to the impact of approximately $50 million from the extended shutdown of the vinyl chloride monomer plant, and Olin’s lower market participation due to deteriorating market conditions.
Olin said that the maintenance and overhaul of its vinyl chloride monomer plant in Texas, USA, required a delay of about seven weeks, resulting in increased fixed manufacturing costs, lost sales and resulting reduced profits, and increased turnover expenses. Currently, vinyl chloride monomer plants have resumed operations at a slower pace.
Olin also announced its decision to cease all operations at its Gumi plant in South Korea, reduce epoxy and upstream capacity at its Texas plant, and reduce its sales and support staffing in Asia.
Olin’s
Second quarter 2023 results are expected to include approximately $12 million of restructuring charges related to these programs, of which approximately $6 million is a non-cash asset impairment charge. The cash portion of these charges is expected to be paid over the next year.
Scott Sutton, Chairman, President and Chief Executive Officer of Olin, said, “The restructuring actions announced on March 21, 2023 will complete the resizing of the epoxy resin business, which is expected to grow from
Beginning in the fourth quarter of 2023, annualized EBITDA will deliver a $50 million improvement, continuing our drive to grow epoxy business revenue to more sustainable levels. Through these actions, we will deploy the capacity of our global epoxy resin assets to improve profitability and prepare for future economic downturns. Our two chemical businesses continued to face a challenging demand environment. Our team remains focused on demonstrating the resilience and ability of our winning model to deliver significantly higher trough adjusted EBITDA levels compared to Olin’s historical approach. ”
Olin’s epoxy resin sales in the first quarter of 2023 were $360.7 million, compared to $789.5 million in the first quarter of 2022, a year-over-year decrease of 54%. The decline in epoxy resin sales was primarily due to a 31% volume decline, as well as a $184.7 million decline in cumene and bisphenol A sales.
Therefore, on March 21, Olin made a decision to stop the operation of its Cumene plant in Terneuzen, the Netherlands, and also stop the production of solid epoxy resin at its plants in Gumi, South Korea, and Guaruja, Brazil.
Last year, Olin’s epoxy resin business revenue declined. In the first half of March, it stopped the comprehensive epoxy resin production at the Stade plant in Germany, and also cut its Fre eport in Texas.
And the production of epoxy resin and related upstream inputs at the Guaruja plant in Brazil, and the German plant resumed production in May of the same year.
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