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Looking More Closely at Albemarle’s Bromine Specialties Segment

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Albemarle’s Bromine Specialties segment

Albemarle’s (ALB) Bromine Specialities segment was the second-largest contributor to its overall revenue at 30.3% in 1Q17. 

The segment reported revenue of $219.2 million in 1Q17, a rise of 11.5% year-over-year (or YoY), compared to $196.6 million in 1Q16.

ALB’s Bromine Specialties segment reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $68.5 million in 1Q17, a rise of 11.2% YoY, compared to $61.6 million in 1Q16. The segment’s adjusted EBITDA margin remained flat at 31.3% in 1Q17, compared to 31.3% in 1Q16.

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Driving factors

The Bromine Specialties segment’s revenue rose primarily on higher sales volumes due to higher demand for flame retardants in electronics applications. However, its sales were adversely impacted by its foreign exchange hedging strategy.

The segment’s adjusted EBITDA was primarily driven by higher volumes. However, its adjusted EBITDA was adversely impacted by increased selling, general, and administrative expenses.

Outlook

The segment is expected to continue its upward trend because demand for flame retardants, elemental bromine, and specialty bromine is expected continue. However, the segment could face costs pressures due to increased raw materials prices.

Investors can indirectly hold Albemarle by investing in the iShares U.S. Basic Materials ETF (IYM). The top holdings of the ETF include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON) with weights of 11.5%, 11.4%, and 8.5%, respectively. In the next article, we’ll look at ALB’s Refining Solutions segment.

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