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Cabot Inaugurates Carbon Black Expansion Project in Indonesia

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Cabot Corporation (CBT - Free Report) announced the groundbreaking of its Cilegon, Indonesia-based carbon black capacity expansion project. This phase is expected to boost annual production capacity by adding around 80,000 metric tons and is slated to be complete in 2021.

The additional capacity from the project is likely to provide local, reliable, high-quality supply to growing carbon black demand in Indonesia as well as throughout Southeast Asia. Notably, demand in the region is growing 4-5% annually.

The capacity expansion project in Cilegon is part of a broader global capacity expansion and debottlenecking project, which was announced in May 2018. The company has made substantial progress toward expanding global carbon black production capacity by 300,000 metric tons. The increase in capacity enables the company to support growth of its industrial rubber, tire and specialty carbons markets globally.

Shares of Cabot have dipped 0.5% in the past year compared with the industry’s 23.2% decline.



Cabot’s adjusted earnings per share (EPS) rose 5% year over year to $1.05 in fourth-quarter fiscal 2019. However, the figure missed the Zacks Consensus Estimate of $1.10.

The company expects adjusted EPS in the range of $3.60-$4.10 for fiscal 2020.

Cabot anticipates challenges in first-quarter fiscal 2020 as customers actively manage year-end inventory levels. Gains from the new fumed silica plant in China and Reinforcement Materials' customer agreements are likely to drive the company’s performance in fiscal 2020. Due to the International Marine Organization’s (IMO) new regulation, which is affecting the Reinforcement Materials and Performance Chemicals units, the company will continue to witness fluctuations in feedstock costs.

Cabot expects the Purification Solutions segment to witness year-over-year growth on continued benefits from its transformation plan.

Zacks Rank & Key Picks

Cabot currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd , Franco-Nevada Corporation (FNV - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland Lake Gold has an expected earnings growth rate of 96.3% for the current year. The company’s shares have surged 148.7% in the past year.

Franco-Nevada has projected earnings growth rate of 46.2% for 2019. The company’s shares have rallied 42.2% in a year.

Agnico Eagle has an estimated earnings growth rate of 168.6% for the current year. Its shares have moved up 67.4% in the past year.

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