Olin Corporation said its chemicals facility in Freeport, TX was affected by Winter Storm Uri and was forced to halt production due to the lack of electrical power, natural gas, and other raw materials.
All of Olin’s Freeport operations were impacted. In addition, production at Olin’s Plaquemine, LA; St. Gabriel, LA; Oxford, Mississippi; and McIntosh, AL facilities were also negatively impacted. As a result, by February 18, 2021, Olin declared Force Majeure on all chemical product shipments from North America. While its facilities have returned to operation, product supply constraints are expected to continue.
Prior to the financial impact of Winter Storm Uri, Olin’s first quarter 2021 adjusted EBITDA was expected to be in the $400 to $425 million range, which compares to fourth quarter 2020 adjusted EBITDA of $246.2 million and first quarter 2020 adjusted EBITDA of $122.8 million. Olin now expects first-quarter 2021 adjusted EBITDA to be in the $475 to $500 million range; this forecast includes a net one-time benefit associated with Olin’s customary financial hedges and contracts maintained to provide protection from rapid and dramatic changes in energy costs, partially offset by unabsorbed fixed manufacturing costs, reduced profit from lost sales, and storm-related maintenance costs. This first quarter 2021 outlook has further potential upside associated with the final settlement of these one-time items associated with Winter Storm Uri.
“During first quarter 2021, all of our businesses were able to amplify our ever-evolving winning model, which we expect to result in a significant improvement in forward quarterly adjusted EBITDA from fourth-quarter 2020 levels,” remarked Scott Sutton, Olin president and CEO. “Our dedicated employees are motivated and focused on exercising Olin’s leadership across its chemicals and ammunition landscape to enhance shareholder value.”
Olin’s chemical products produced include chlorine and caustic soda, vinyl, epoxies, chlorinated organics, bleach, and hydrochloric acid. It also is a manufacturer of ammunition through Winchester.
Photo courtesy Olin Corp.