Carbon black maker says it has reached early deals with ‘almost all’ customers
Boston, Mass. – Cabot Corp. expects to realize an additional $80 million (€79 million) in rubber carbon black revenue from price increases in its 2023 tire customer deals.
“[In tire agreements] We have made pricing and product line enhancements that we believe will deliver $35 million per quarter in increased price,” Sean Keohane, President and CEO, said in a conference call on May 8. november.
The figure, Keohane explained, will be reduced by about $15 million to $20 million per quarter due to the impact of currency translation as well as rising inflation on a cost basis.
“And at this point, we’ve reached agreement with almost all of our major customers,” Keohane said on the fourth quarter earnings call.
“It is certainly earlier than in a typical year. And I think it reflects the desire of our customers to secure their supply in a tight market,” he added.
According to Cabot’s boss, security of supply, especially after the Russian invasion of Ukraine, was “the main motivation” for most customers to reach a deal quickly.
“So overall I would say the outcome of the customer negotiations was very good for Cabot and for our customers,” he said.
Cabot ended its 2022 fiscal year strong with annual revenue up 26% to $4.3 billion.
The Reinforcement Materials segment, which, among other products, manufactures carbon black for the rubber and tire industry, reported a 62% increase in fourth quarter EBIT (profit) to $109 million .
Cabot linked the increase in profits to improved unit margins thanks to higher prices and higher volumes in all regions.
Segment sales rose 42% to $700 million in the fourth quarter, helped by higher volumes and prices.
Volumes, Cabot said, were up 4% in Asia and America each, while Europe saw a 5% year-over-year increase in the quarter.
For the full year, segment profit rose 24% to $408 million, on sales up 44% to $2.5 billion.