Trinseo Breathes New Life into Quest to Sell Lucrative Styrenics Business

USA: Trinseo, the materials company based in Wayne, PA, has decided to relaunch the sale of its Styrenics business. Instead of selling the entire unit, Trinseo's new strategy is to market individual assets and regional businesses included in that unit. The announcement was made on May 4th in a news release that also outlined the company's financial results for the first quarter. Trinseo made an attempt to sell their Styrenics business in 2022, but due to unfavourable economic circumstances, they discontinued their efforts in July.

President and CEO Frank Bozich announced that the sale had been paused due to the challenging economic and financing environments, making it difficult to get an adequate value for the assets, despite the intended strategy for separating the Styrenics business. The Trinseo units covered in the sale include Polystyrene resin plants in Belgium, Germany, Hong Kong, and Indonesia, as well as Styrene monomer plants in Germany and the Netherlands. The impact of the change in strategy on Trinseo's 50% ownership of North American PS maker Americas Styrenics LLC, which was initially part of the sale, remains uncertain.

AmSty, which has its headquarters in The Woodlands, Texas, is a PS manufacturer and joint venture between Trinseo and Chevron Phillips Chemical Co. With five PS resin plants in the U.S., one in Colombia, and a stryrene monomer unit in St. James, La, it is among North America's biggest PS producers.

Trinseo has reported a decline in its sales for Q1 of 2023, which stood at just below $1 billion, marking a 27% decrease from the same period in the previous year. The company also reported a Q1 loss of $49 million, which is significantly lower than the $17 million profit it showed in the corresponding period in 2022. Additionally, the sales within Trinseo's Engineered Materials unit, which includes Acrylic resin and sheet, were down by 30% to $206 million. The unit also posted negative adjusted EBITDA of $12 million, which is a considerable drop from $35 million in earnings in 2022.

Trinseo's Plastic Solutions unit, which includes Polycarbonate and ABS, experienced a 27% decline in first-quarter sales to $289 million, with adjusted EBITDA taking a steep 62% plunge to $26 million. Meanwhile, Trinseo's PS unit, excluding AmSty, faced a 34% decrease in sales to $209 million, with adjusted EBITDA dropping 64% to $16 million. On the other hand, AmSty's adjusted EBITDA was down 18% to $18 million. Despite these challenges, Trinseo's CEO, Frank Bozich, remained optimistic, stating that the company's operating results have significantly improved due to reduced costs and restructuring efforts.

Trinseo, despite the current challenging economic environment, has managed to generate positive free cash flow by implementing various liquidity improvement measures, including reducing working capital. Trinseo's CEO, Bozich, expects the company's performance to improve significantly in the second quarter due to lower raw material and corporate costs, better absorption of fixed costs, and reduced natural gas hedge loss. The company is taking actions to enhance its cash and liquidity profile despite the overall economic situation. In the past month, Trinseo has sold an Acrylic sheet plant in Matamoros, Mexico, to Plaskolite LLC, closed a Styrene monomer plant and a PC resin line in Germany, and reduced Styrene Butadiene latex production in Finland.

Trinseo, a chemical manufacturing company, experienced a massive loss of nearly $431 million in full-year 2022, after having a profit of $440 million the previous year. Despite sales increasing by almost 3 percent, rising to nearly $5 billion, the losses were higher than what the officials had warned investors about in January. Trinseo's initial projection was to incur a loss not exceeding $126 million for the year. Trinseo's per-share stock price was at $23.50 at the beginning of 2023 but decreased to $17.50 during early trading on May 5, resulting in a loss of 25 percent so far this year