Cabot Corporation is the world's largest seller of carbon black, an ultra fine particle used primarily in the production of tire rubber, by revenue. The company also generates revenues by selling aerogel, a low density insulation material, and other nano-sized particles such as fumed metal oxides, which are nano-sized particles used in the production of adhesives, sealants, coatings, greases, inks and toners.
In 2009, CBT incurred a net loss of $77 million on revenues of $2.24 billion. This represents a turnaround from 2008, when the company generated a net income of $164 million on $3.19 billion in revenues.
Cabot Corporation is divided into segments by both operating region and business segment. The company operates in 18 countries and five regions: North America, South America, Europe, Asia Pacific, and China. In addition, Cabot has five primary business segments:
Cabot’s business strategy is to use the cash earned by their older and core product lines (carbon black, fumed metal oxides, and supermetals products) to develop their newer products (specialty fluids, aerogel, and inkjet colorants).
Cabot’s factories require oil to produce many of their carbon black products. In addition, the US Department of Energy expects the global demand for oil and petroleum to increase by 1.2 million barrels per day in countries like China, India, and the Middle East. According to the Department of Energy, the global production of crude oil is also expected to decrease in non-OPEC countries, while the production of crude oil in OPEC countries is uncertain. Both of these factors significantly affect the price of oil. If the price of oil rises there will be less demand in the automotive industry and therefore less demand for carbon black to be used in the production of car tires. Cabot’s production costs will also rise with a rise in the price of oil, which will negatively affect Cabot’s net income.
Rising oil prices dramatically increase the cost of owning a car, which discourages many potential buyers from buying new cars and existing car owners from driving as much as normal. Naturally, this has decreased the demand for car tires. Further increases in the price of oil will encourage current car drivers to decrease their driving and discourage potential car buyers from buying new cars. Both of these effects will reduce the demand for car tires and subsequently reduce the demand for Cabot's rubber black.
In March, 2008 Cabot announced the shutdown of one of its rubber black plants in West Virginia because there was not enough demand for rubber black in the US. In response to falling demand in the US, Cabot will expand its carbon black operations in China. The company expects most of its growth over the next several years to come from its Chinese expansion. As a result, Chinese demand for carbon black, will play a much more important role in the company's near term growth.
Cabot competes for market share in each of its five business segments and in each of its operating regions. Cabot’s main competitors in the carbon black industry are:
In its other industries, Cabot competes against hundreds of various local and global producers.