HOUSTON - Orion Engineered Carbons S.A. (NYSE: NYSE:OEC), a global leader in specialty chemicals, has announced an investment in Alpha Carbone, a French tire recycling company. The collaboration is set to boost the production of tire pyrolysis oil and recovered carbon black, materials essential for creating sustainable carbon black used in tires and rubber products.
This strategic partnership includes a long-term supply agreement, positioning Orion as the exclusive customer for Alpha Carbone's tire pyrolysis oil. This move aligns with Orion's commitment to sustainability, as the company seeks to offer large-scale circular grades of carbon black to its clients in the rubber industry.
Orion's CEO, Corning (NYSE:GLW) Painter, emphasized the investment's role in reinforcing the company's innovative edge and its dedication to fostering a circular economy. Orion has been at the forefront of developing circular carbon black with major tire manufacturers, utilizing tire pyrolysis – the only proven technology that produces circular carbon black suitable for new tires.
The process employed by Alpha Carbone involves subjecting end-of-life tires to high temperatures, which breaks them down into synthetic gas, recovered carbon black, and tire pyrolysis oil. Orion boasts the unique capability of producing circular carbon black from 100% tire pyrolysis oil as a feedstock, demonstrating that these circular products can effectively replace virgin carbon black in various applications.
Alpha Carbone's facility in Dole, France, is expected to commence operations in late 2025. In addition to supplying pyrolysis oil to Orion, Alpha Carbone will also sell recovered carbon black to its customers under long-term contracts.
Laura Pech, CEO of Alpha Carbone, highlighted the investment's significance in elevating the Dole facility to the highest industrial standards. This development supports Alpha Recyclage Franche Comté's strategy of offering optimal recycling solutions for end-of-life tires.
The partnership marks a significant step towards sustainable material production, addressing the annual disposal of approximately 500,000 metric tons of tires in France. This announcement is based on a press release statement and includes forward-looking statements subject to risks, uncertainties, and changes in circumstances.
InvestingPro Insights
As Orion Engineered Carbons S.A. (NYSE: OEC) forges ahead with its sustainable initiatives in the specialty chemicals industry, the company's financial health and stock performance provide valuable insights for investors.
With a market capitalization of $1.48 billion and a price-to-earnings (P/E) ratio of 16.89, Orion reflects a stable valuation in the market. Adjusted for the last twelve months as of Q1 2024, the P/E ratio holds steady at 16.8, suggesting consistent investor perceptions over recent periods.
One notable InvestingPro Tip for Orion is that management has been actively engaging in share buybacks, a positive sign that could indicate the leadership's confidence in the company's future prospects. Moreover, the fact that three analysts have recently revised their earnings estimates upwards for the upcoming period further bolsters the outlook for Orion, suggesting potential growth that could be of interest to prospective investors.
Orion's stock is characterized by relatively low price volatility, which may appeal to investors looking for stable investments. The company's profitability over the last twelve months, as indicated by a gross profit margin of 23.04%, showcases its ability to maintain earnings efficiency. Furthermore, with analysts predicting profitability for the current year, Orion appears to be on a favorable trajectory.
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