Market Dynamics

DuPont's TiO2 business volume was up 8% while prices were down 9% in 1Q 2013

Time: 2013-06-24 Source from: CCM

DuPont reported its 1Q 2013 financial results recently, under the continuing sluggish TiO2 market. It realized net sales of USD10.4 billion with a YoY growth of 2% and net income of USD3.35 billion with a YoY growth of 123.07%, according to Titanium Dioxide China Monthly Report, issued by CCM in May.
 
The dramatic increase of net income was caused by the divestment of discontinued business, which generated net income after tax of USD1.96 billion while net income from discontinued business after tax was only USD95 million in 1Q 2012. Notably, DuPont finally completed the sale of its Performance Coatings segment in 1Q 2013, proving the failure of integration of TiO2 downstream business and TiO2 business. Up to now, there are barely any companies which have successfully combined TiO2 business and coating business together, including the coating giants and TiO2 giants around the world. Except for the dramatic income from discontinued business, DuPont realized net income of USD1.39 billion in 1Q 2013, a bit lower compared to USD1.41 billion in the same period of 2012. The flat performance in operating earnings of DuPont in 1Q 2013 was largely due to a decline of USD320 million in the Performance Chemicals segment from 2012's high level.
 
The Performance Chemicals segment (including TiO2 business and fluoroproducts) achieved sales of USD1.59 billion in 1Q 2013 with a YoY fall of 17% and operating earnings of USD251 million with a YoY fall of 56%. In 1Q 2013, the total sales volume of the Performance Chemicals segment decreased by 6% and average price declined by 11% compared with that in 4Q 2012. In detail, as calculated by CCM, the sales volume of TiO2 products went up by 8% while that of fluoro products went down by 14%; the average prices of TiO2 products went down by about 9% while that of fluoro products edged down 2%. DuPont claimed that the disappointing performance of its Performance Chemicals segment was primarily due to substantial price declines in the TiO2 market and weak demand for fluoropolymers, particularly in North America and the Asia Pacific.
 
As the biggest consumption country of TiO2 supplying more than 30% of the global TiO2 output in 2012, China has great influence over the global TiO2 market. The TiO2 industry in China is still undergoing a de-stocking process, while the TiO2 market remains sluggish, which might last until mid-2013. DuPont expects the sales of the Performance Chemicals segment to drop modestly versus prior year in 2Q 2013 due to lower YoY TiO2 price and the TiO2 sales volume will gradually stabilize with the absence of customer destocking. However, as the year has progressed, the TiO2 industry fundamentals have shown signs of improvement. Besides, DuPont also announced a 5% increase in the company's quarterly cash dividend, reflecting DuPont's confidence in its global growth strategy, strong balance sheet and solid track record of market-driven science.

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