Olin (NYSE:OLN) shares traded more than 4% lower in pre-market Tuesday after the company lowered its outlook for the second quarter.
The manufacturer of chemical products lowered its adjusted EBITDA range to $350-360 million, below the prior guidance "due to an approximately $50M impact from an extended vinyl chloride monomer plant turnaround and additionally due to a lower market participation rate by Olin in the face of deteriorating market conditions."
"The planned vinyl chloride monomer plant maintenance turnaround at the Freeport, Texas facility required an extension of approximately seven weeks and resulted in higher unabsorbed fixed manufacturing costs, reduced profit from lost sales, and higher turnaround expense. The vinyl chloride monomer plant has returned to operations at a reduced rate," the company said in an update.
The company also said it will cease all operations at its Gumi, South Korea facility, and reduce epoxy resin and upstream capacity at its Freeport, Texas facility. Moreover, Olin plans to reduce sales and support staffing across Asia.
As a result, the Q2 results are expected to include roughly $12M of restructuring charges associated with these plans.
"Through these actions, we will have configured our global Epoxy asset capability to improve profitability through future recessions," remarked Scott Sutton, Chairman, President, and Chief Executive Officer.
"Both of our chemical businesses continue to experience a challenging demand environment. Our team remains focused on demonstrating our winning model's resilience and ability to deliver significantly higher trough level adjusted EBITDA compared to Olin's historical approach."