Chemours reports $204M third quarter profit

Chemours announced its most successful quarter since splitting from DuPont last year, reporting a $204 million profit in the third quarter of 2016.

That represents a significant turnaround from the $29 million loss the Wilmington chemical company reported during the same quarter last year and the $18 million loss it recorded in the second quarter of this year. Chemours has about 1,000 employees in Delaware and has reported only two profitable quarters since becoming an independent company.

Mark Vergnano, Chemours' CEO, credited the improvement to a host of factors including the success of its Opteon refrigeration line and an aggressive cost-cutting plan that reduced the company's expenses by more than $100 million. About $60 million of those overall savings were realized in the third quarter, Vergnano said in a statement accompanying the earnings.

"Transformation initiatives are pervasive throughout the company and our results speak for themselves," Vergnano said in the statement.

The Opteon product line is a group of refrigerants developed to meet tougher regulatory standards for the emission of greenhouse gases in the United States and the European Union. Chemours had previously said the Opteon products could eliminate an estimated 325 million tons of greenhouse gases by 2025.

Opteon's success negated a 38 percent sales drop for Chemours' Chemical Solutions products. Overall, Chemours reported third quarter sales of $1.4 billion, a 1 percent increase from the second quarter, but a 6 percent decline compared to the third quarter of 2015.

Chemours has struck two high-profile contracts this year to sell its Opteon products. Dutch supermarket chain Ahold is using Opteon XP40 to renovate the refrigeration units in 175 stores across the Netherlands. In addition, Johnson Controls, a Milwaukee-based conglomerate that produces everything from car batteries to HVAC systems, announced earlier this year it will begin using Opteon products.

In May, Chemours announced it will invest hundreds of millions of dollars over the next three years to build an Opteon production plant in Corpus Christi, Texas.

Demand for Opteon products pushed sales of Chemours' Fluoroproducts unit, which manufacturers the line, to $591 million, a 3 percent gain from the third quarter of 2015 and second quarter of 2016, respectively.

Chemours said that Opteon's demand was offset by government-imposed volume reductions of refrigerants.

Cost savings were also cited as a reason for the strong results with more than two-thirds of the reductions being realized in the third quarter. The company has aggressively worked to slash $350 million in expenses by 2017. Some of those cuts have impacted Delaware, including layoffs and the shuttering of its Edge Moor titanium dioxide plant near Wilmington.

"We continue to make excellent progress on all aspects of our transformation plan, realizing an incremental $60 million in cost savings during the quarter," Vergnano said. "We are benefiting from the OpteonTM refrigerant ramp up and the expansion of our low-cost TiO2 capacity at Altamira, while at the same time delivering our planned cost reductions."

Chemours also reported improved sales in its Titanium Technologies unit. The division recorded sales of $625 million, up 1 percent from the same quarter in 2015 and an increase of 5 percent from the second quarter. Global prices for Titanium Dioxide, one of Chemours' lead products, increased 2 percent in the quarter, helping offset weaker overseas currencies.

The Chemical Solutions unit reported a 38-percent sales decline to $182 million. Chemours attributed the sharp decline to the divestiture of some of the unit's businesses, including its Clean and Disinfect business, Sulfur Products and Aniline production facility in Beaumont, Texas. The Clean and Disinfect unit was sold to Lanxess, a German company for $230 million. Dow Chemical purchased the Aniline plant last year for $140 million. Earlier this year, Veolia North America purchased Chemours' Sulfur unit for $325 million.

All of the divestitures were part of Chemours' plan to overhaul its Chemical Solutions unit. Combined the sales generated more than $700 million for Chemours.

Chemours' strong quarter is good news for Delaware, and Wilmington in particular. The company announced over the summer that it would remain in Wilmington, ending months of speculation that it could move to New Jersey or Pennsylvania, taking more than 1,000 jobs out of Delaware.

Currently, Chemours is hunting for a new permanent headquarters, but could remain in the DuPont Building, which it picked up as part of the DuPont spinoff.

Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ or jmordock@delawareonline.com.