Chemours reported a $29 million loss in the third quarter as restructuring costs and sluggishness in some businesses outpaced gains made by cost cutting.
Shares were up more than 5 percent in early trading, perhaps a sign that the losses were not as high as first feared.
Net sales for the company that was spun off from DuPont in July were $1.5 billion. Adjusted net income was $73 million, with a net loss of $29 million once restructuring costs were added.
The company continued to weighed down by a downturn in its titanium business. As part of its cost-cutting efforts, the Edgemoor plant near Wilmington has been closed, resulting in the loss of 300 or more jobs.
The future of the company and its hundreds of employees in Wilmington is the subject of much speculation. It currently occupies the former headquarters of DuPont in downtown Wilmington, and rumors continue to point to possible locations in nearby states.
There have also been reports of a private equity firm swooping in and buying the company. The value of Chemours stock is around $1.5 billion, a number that might be attractive to private equity investors, who might see more ways to wring costs out of the company.
DuPont itself is now based just outside the city at the Chestnut Run Plaza site as a new interim CEO looks to find ways cut costs and refocus operations after the sudden departure of Ellen Kullman.
The company, which ended up with a heavy debt load and environmental liabilities, due to the spin-off from DuPont, has launched a “Five-Point Transformation Plan” aimed at boosting income and strengthening the balance sheet.
Current cuts are expected to save the company $200 million.
Chemours CEO Mark Vergnano said, “We accomplished a great deal in our first 90 days as an independent company. The meaningful improvement over the second quarter is just one more sign of our commitment to deliver our five-point transformation plan and the increasing strength of our Fluoroproducts business. We remain focused on our cost reduction targets as demonstrated with over $60 million hitting the bottom line in the third quarter. While TiO2 (titanium dioxide) market conditions remain soft, we are taking prudent actions to drive continued improvements in our Adjusted EBITDA and free cash flow.”
Third quarter net sales were down 9 percent from $1.6 billion in the prior-year quarter. Third quarter net
Fluoroproducts segment sales saw sales gains from a new line of refrigerants under regulatory-mandated phase-out in the United States but was also hit by more competition and lower sales volumes.
That was partly offset by lower refrigerant volumes and increased competitive pressure for fluoropolymers versus the previous year quarter. Segment profitability was also impacted by $34 million of unfavorable currency movements versus the prior-year quarter.
The company initiated a strategic review of the poor-performing Chemical Solutions segment during the third quarter. This evaluation is expected to result in a combination of asset sales, site shutdowns, and other measures to improve segment profitability. The company recorded a pre-tax fixed asset impairment charge in the third quarter of $45 million and a pre-tax goodwill impairment charge of $25 million.
Vergnano also commented on the future outlook: “Going forward, we expect to deliver additional cost reductions and organic growth from market adoption of our novel Opteon refrigerant product line, a new technology with low global warming potential. In the fourth quarter, we anticipate typical seasonal declines in volumes in our Titanium Technologies and Fluoroproducts segments. Further, TiO2 price remains under pressure. However, we expect these impacts will be offset by continuing progress in cost reductions as we drive improvements across our organization and facilities. These benefits are important as we continue to face uncertain global economic conditions and continued soft TiO2 market dynamics.”
