February 11, 2025 – Orion Engineered Carbons Tackles Market Challenges with Strategic Adjustments
Recently, according to the British publication European Rubber Journal, Orion Engineered Carbons, based in Houston, USA, encountered a downturn in demand for rubber in the final quarter of 2024 in Western markets. This situation was primarily caused by a surge in tire imports from Southeast Asia and China to North America and Europe, which continuously impacted local tire production. Mr. Pekka Kantola, CEO of Orion Engineered Carbons, pointed out that inventory adjustments made by key customers at the end of the year had undoubtedly exacerbated an already tense market environment.
In response to these challenges, Orion Engineered Carbons took decisive action in the fourth quarter of 2024 by initiating a workforce reduction plan. The plan anticipated a 6% cut in non-factory employees and was expected to be largely completed in the first quarter of 2025, potentially saving the company around USD 6 million . This measure aimed to optimize the company’s structure and enhance operational efficiency to better cope with market fluctuations.
According to Color Masterbatch Industry Network, Orion Engineered Carbons was also compelled to revise its profit expectations for fiscal year 2024 downwards. Originally forecasting a profit target of USD 305-315 million, the company had to adjust due to foreign exchange conversion impacts from a strengthening US dollar and one-time costs associated with implementing the cost-reduction plan. Additionally, sales of rubber carbon black fell short of expectations in the fourth quarter of last year, and the business mix of specialty carbon blacks also performed poorly, collectively contributing to the decline in profit expectations.
Despite the current challenges, Mr. Kantola remained optimistic about the market prospects for 2025. He believed that although unfavorable foreign exchange factors might persist, the structural improvements the company had made over the past few years had laid a solid foundation for moderate growth in the future. Meanwhile, Orion was actively formulating a new business strategy to ensure that its rubber carbon black business could seize market opportunities and achieve sustainable development during the rebalancing of global tire market trade flows in 2025 and beyond.