It's been a turbulent year for Chemours (CC, Financial), a specialty chemical company, marked by leadership changes and production disruptions due to a severe drought in Mexico. Despite these challenges, CC reported better-than-expected Q3 results, highlighted by record net sales in its Thermal & Specialized Solutions (TSS) segment, signaling business stabilization and a promising outlook for FY25.
Key Highlights:
- CC had faced year-over-year net sales declines in six of the previous seven quarters, primarily due to price drops and lower volumes, especially in the Advanced Performance Materials (APM) segment. However, Q3 saw a turnaround with net sales growth of 0.9%, driven by stronger-than-expected volumes across all segments.
- The TSS segment, which includes refrigerants and thermal management products, led the growth. TSS net sales increased by 6% to $460 million, driven by a 21% rise in Opteon Refrigerants. Despite high hydrofluorocarbon (HFC) inventory levels affecting market pricing, strong demand for Opteon mitigated pricing pressures, resulting in a 2% price decline but an 8% volume increase.
- Titanium Technologies (TT) saw a 2% year-over-year decrease in net sales to $679 million, improving from a 5% drop last quarter. This segment, producing TiO2 pigment for coatings and packaging, was impacted by the Mexico drought but still achieved a 1% volume increase year-over-year, surpassing expectations. The company anticipates meeting rising market demand as interest rates decline.
- The APM segment continues to face challenges in macroeconomically sensitive markets like electronics and communications, with prices falling by 7% in Q3. Nevertheless, volume growth across the portfolio led to a 1% year-over-year increase in net sales to $348 million.
Under the leadership of new CEO Denise Dignam and CFO Shane Hostetter, who took their roles in March and June 2024, respectively, Chemours is moving in a positive direction after earlier turbulence. Although the company anticipates a seasonally slow quarter with sequential net sales declines in TT and TSS, the outlook for FY25 is optimistic as expected rate cuts in the U.S. and Europe support macroeconomic recovery.
