Cabot (CBT) Acquires Carbon Black Manufacturer in China
Cabot Corporation CBT announced the acquisition of the NSCC Carbon (Jiangsu) Co., Ltd. from Nippon Steel Carbon Co., Ltd., a subsidiary of Nippon Steel Chemical & Material Co., Ltd. The carbon black manufacturing facility is located in Pizhou, Jiangsu Province, China.
Cabot has been actively involved in exploring opportunities to enhance capacity in its global carbon black network through operational improvement, plant expansion, and debottlenecking of projects.
The acquisition, in sync with the company’s growth objectives, will help it serve customers in China better. The 50,000-metric ton facility will support Cabot’s specialty carbons product line as well.
The buyout will also help Cabot meet the growing needs of its specialty carbons customers worldwide and strengthen its global leadership in carbon black market.
The plant is scheduled to be temporarily idled as the company is set to conduct maintenance and technology upgrades. The upgrade of environmental and manufacturing equipment will enable the plant to be more flexible to manufacture different carbon black products as well as meet environmental standards.
The purchase price of the deal is payable on satisfaction of certain conditions while technology and equipment upgrade expenses are expected at around $50 million for the next two years.
In a year’s time, shares of Cabot have gained around 12.2% against the industry’s decline of 4.6%.
Cabot, during its fiscal third-quarter call, said that it expects the Reinforcement Materials segment to maintain its strong performance in the fiscal fourth quarter on solid operational and commercial execution. For Performance Chemicals segment, it expects to maintain margins while driving volume growth in specialty Carbons and Formulations.
The Reinforcement Materials segment is benefiting from strong commercial execution that is driving volumes and margins. The Performance Chemicals unit is also gaining from the favorable impact of price increase actions. Notably, in the fiscal third quarter, sales at both the segments rose year over year.
The company is taking appropriate pricing actions to offset feedstock cost inflation. It is also committed toward driving product mix at Performance Chemicals through the launch of products and applications.
Cabot Corporation Price and Consensus
Cabot Corporation Price and Consensus | Cabot Corporation Quote
Zacks Rank & Other Stocks to Consider
Cabot is a Zacks Rank #2 (Buy) stock.
Other top-ranked companies in the basic materials space are Trinseo S.A. TSE, CF Industries Holdings, Inc. CF and Celanese Corporation CE.
Trinseo has an expected long-term earnings growth rate of 12% and a Zacks Rank #1 (Strong Buy). The company’s shares have gained 17.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has an expected long-term earnings growth rate of 6% and a Zacks Rank #2. The company’s shares have rallied 58% in the past year.
Celanese has an expected long-term earnings growth rate of 10% and a Zacks Rank #2. Its shares have risen 5.5% in a year’s time.
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