News from Notch Consulting, Inc.

Cabot Corp. announced 4Q and full fiscal year earnings on Wednesday, October 29. The conference call to discuss results will be held today (Thursday, October 30) at 2:00 pm EST.

Here are the results.

Cabot reported net sales of $853 million for 4Q 2008, up from $675 million during the same quarter of 2007, and net sales of $3,191 million for full year 2008, up from $2,616 million for FY 2007. Net income was $11 million for 4Q 2008, down from $24 million in 4Q 2007. Net income for full year 2008 was $85 million, down from $129 million for FY 2007.

Excerpts from the release:

Commenting on the results, Patrick Prevost, Cabot’s President and CEO, stated, “Although we are not pleased with our operating results this quarter, I am confident in the underlying strength of our businesses. Key drivers of this quarter’s performance are first, as anticipated, the negative time lag effect in our rubber blacks supply contracts was unprecedented. Rubber Blacks nonetheless improved profitability despite the difficult operating environment through strong margin and cost management. Second, the softening economic environment became more global in scope and affected our volumes during the quarter, particularly in the automotive and construction sectors. Third, our other income and expense was unfavorably affected by $9 million from the non-cash translation of intercompany loans, denominated in U.S. dollars, provided to our Brazilian subsidiary, whose currency depreciated during the quarter.”

Prevost continued, “It is clear that the global macroeconomic issues have begun to affect our business results in the form of reduced demand in some of our key industrial sectors. Our conservative financial practices have positioned us with a strong balance sheet to withstand these turbulent conditions and we remain focused on executing our longer term strategies to further advance our position as a global market leader.”

Results for Rubber Blacks:

Rubber Blacks profitability increased by $13 million when compared to the fourth quarter of 2007. Solid margin management and lower fixed manufacturing costs allowed the Business to overcome a significant unfavorable contract lag ($36 million) and lower volumes ($8 million). Volumes declined by 7% driven by economic softness in all regions as our tire customers reduced production on weaker demand. The Americas declined by 10%, with North America down 7% and South America down 15%; the Europe, Middle East, Africa region was down 6%; and Asia Pacific was down 6% overall, with China down 16%, in part due to the Olympics, more than offsetting an increase of 3% in the rest of Asia. For the full fiscal year 2008, operating profit before tax (“PBT”) increased despite the unfavorable contract lag and difficult economic conditions, which led to flat volumes. The Business was able to offset the vast majority of these unfavorable factors through solid margin management and strict control on manufacturing spending, and also benefited from foreign currency translation. The time lag of feedstock related pricing adjustments in the Company’s rubber blacks supply contracts had an unfavorable impact of $36 million and $66 million for the fourth quarter and full fiscal year 2008, respectively. This is compared to an unfavorable impact of $13 million and $6 million in the same periods of 2007.

On Tuesday, October 21, 2008, Bridgestone Group announced that it had officially opened Mexico Carbon Manufacturing SA DE CV, a wholly-owned carbon black in Altamira, Tamaulipas, Mexico. The new plant will supply Bridgestone Group’s tire plants in North America as well as Central and South America. Production capacity at the plant is forecast to be approximately 35,000 tons a year. The new plant is operated by MXCB and this is the Bridgestone Group’s third carbon black plant, joining facilities in Japan and Thailand. Bridgestone is currently the only major tire manufacturer to be directly back-integrated into carbon black manufacturing.

According to the press release, the management goal of the Bridgestone Group is to establish the status of being the undisputed world No. 1 tire and rubber company both in name and reality, and to this end, is working to enhance competitiveness throughout the entire supply chain. By making the most effective use of raw materials and equipment manufactured internally, the Bridgestone Group is able to develop and produce high-quality tires while ensuring stable costs and supply over the long term. Going forward, the Bridgestone Group will continue aiming for optimum raw material procurement by combining internal manufacture with procurement from external suppliers.

Below are the details of the new plant:

Outline of Mexico Carbon Manufacturing SA DE CV Location : Altamira, Tamaulipas, Mexico
President : Yoichi Shiroki
Plant : Start of operation — May 2008
Plant site — approximately 430,000m2
Product — carbon black
Production capacity — 35,000 ton/year
Employees — approximately 100

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Update: Here is a Spanish language article on the opening of Bridgestone’s new carbon black plant. It provides additional details about the inauguration ceremony, which was led by the mayor, Javier Gil Ortiz, accompanied by the Secretary for Economic Development and Employment in the state, Alfredo Gonzalez Fernandez on behalf of the Governor Eugenio Hernandez Flores.

Other attendees included the directors of Bridgestone Group, Toshiro Iwata, Yoichi Shiroki, Narumi Zaitsu, Osama Inoue, and Pascuali of Ariel; Japan’s Ambassador to Mexico, Masaaki Ono; the Vice-Chairman of the Daewoo Group, Il Woo Han; the Secretary General of the Executive Committee of the National Union of Petrochemical Industry, Gilberto Muñoz Mosqueda; and the Director General of the Port of Altamira, Alejandro Gochicoa Matienzo.

Notch Consulting will publish the latest edition of the Carbon Black World Data Book in November 2008. This comprehensive report on the global carbon black industry will be fully revised and expanded, including the latest data on expansions, capacity, utilization rates, production, demand, markets, and pricing.

The 2008 edition of the Carbon Black World Data Book will include several major additions:

• For all countries and regions, volume demand for carbon black in tire markets will be further broken out into passenger tires, truck tires, and other tires/retreading.
• Purchase of the report will now include quarterly updates of carbon black pricing for four major rubber grades.

Cancarb Limited, a Canadian company that is the world’s leading producer of medium thermal black, yesterday named a new president. Effective October 9, 2008, Dave Petrie has been appointed President of Cancarb, replacing David Carmichael, who has left the company to pursue other interests. Dave Petrie has been with Cancarb since 1996, most recently as the Director, Marketing, responsible for global marketing of Thermax medium thermal black as well as overseeing customer service, logistics, and quality assurance. I have known Dave for years in this capacity and have always found him to be highly knowledgeable, capable, and helpful. We wish him luck in his new position, and wish good luck to David Carmichael in all his future endeavors.

Here is the press release (PDF).

According to R&P News (subscription required), Columbian Chemicals Co. has appointed Kevin Boyle to the position of president and CEO, succeeding Jae Sup Lee, who is retiring. Mr. Boyle is currently a member of the company’s board of directors and has more than 20 years of experience in the chemical industry. Most recently he was president and CEO of OCI Chemical, a wholly owned subsidiary of DC Chemicals Ltd. of South Korea (which is also the parent company of Columbian). Boyle has also held positions at Petrofina, which now part of the French-based Total S.A.