Cabot Corporation Provides Update on Current Demand Environment

Cabot Corporation (NYSE: CBT) today provided an update on the current demand environment and the impact on its business segments.

Sales volumes in the Performance Chemicals segment for April and May 2023 were 13% lower than the same months of 2022 with declines across all product lines, except Battery Materials, where volumes continued to grow year-over-year, driven by an improvement in electric vehicle sales in China. While sales volumes in the third fiscal quarter in the Performance Chemicals segment have been improving sequentially as compared to the second fiscal quarter, the pace of improvement has been slower than what the Company expected.

“We are not seeing the anticipated pace of recovery in China after a challenging March quarter in the Performance Chemicals segment,” said Sean Keohane, Cabot President and Chief Executive Officer. “In addition to the weakness in China, we continue to see soft demand on a global basis across many of our key end markets, including construction and consumer applications. Given these factors, we now expect EBIT in this segment in the third fiscal quarter to be only modestly higher than the second fiscal quarter.”

In the Reinforcement Materials segment, volumes were down 8% for April and May 2023 as compared to the same months of 2022, with declines across all regions and principally in the replacement tire market.

Keohane continued, “Despite the demand environment, we are seeing the expected quarterly year-over-year improvement in pricing and product mix from our calendar year 2023 customer agreements in the Reinforcement Materials segment. We continue to expect these pricing and product mix benefits to drive strong growth in year-over-year segment EBIT results in the third and fourth fiscal quarters.”

“Although we continue to expect stronger adjusted earnings per share in the second half of the fiscal year as compared to the first half, the magnitude of this increase will be less than we previously expected and we are no longer expecting adjusted earnings per share for fiscal 2023 to be in the range of $6.10 to $6.50,” Keohane said. “We continue to anticipate a robust operating cash flow for the full fiscal year. We are focused on reducing costs in the near-term and we believe our investments have us well positioned for long-term growth. I look forward to providing a more fulsome update on our business outlook and fiscal year adjusted earnings per share guidance on our third quarter earnings call in early August.”