Stepan Company (SCL) experienced a sharp 6.01% decline during Wednesday's trading session, as investors reacted to the company's first-quarter 2025 earnings report and ongoing concerns about potential tariffs. Despite reporting overall growth, challenges in the polymer segment and uncertainties surrounding the impact of tariffs weighed heavily on investor sentiment.

The company reported first-quarter adjusted EBITDA of $57.5 million, up 12% from the previous year, driven by strong performance in surfactants and specialty products. However, the polymer segment faced headwinds, with adjusted EBITDA decreasing slightly year-over-year. The decline was attributed to less favorable product mix and high-cost inventory carryover, which offset the 7% volume growth in the segment.

Stepan's management expressed cautious optimism about the full year 2025 but acknowledged several challenges. The potential implementation of tariffs on raw materials and finished products has created uncertainty in the market. While the company is working to mitigate these impacts through sourcing strategy changes and pricing actions, the full effects remain unclear. Additionally, the construction industry, a key market for Stepan's Rigid Polyol products, continues to face constraints due to economic uncertainties and the high-interest rate environment, limiting the growth potential in this area.