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Key Takeaways from Chemours' 4Q16 Earnings

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Part 4
Key Takeaways from Chemours' 4Q16 Earnings PART 4 OF 5

Chemours’ Fluoroproducts Segment’s Revenue Rose in 4Q16

Chemours’ Fluoroproducts segment

Chemours’ (CC) Fluoroproducts segment reported revenue of $569 million in 4Q16—an increase of 10.5% compared to $515 million in 4Q15. The Fluoroproducts segment represented 42.7% of Chemours’ total revenue in 4Q16.

Chemours&#8217; Fluoroproducts Segment&#8217;s Revenue Rose in 4Q16

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The Fluoroproducts segment posted adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $111 million in 4Q16—an increase of 38.8% compared to $80 million in 4Q15.

Driving factors

The segment’s revenue growth was mainly driven by continued demand for Opteon refrigerants. Opteon refrigerant ranges are approved by the EPA. Opteon will help the industry transition away from products that the EPA removed from the SNAP list in applications such as commercial refrigeration and air conditioning. However, the segment’s volume growth was partially offset by lower prices and the unfavorable mix within fluoropolymers.

The segment’s EBITDA growth was primarily driven by cost-saving measures and increased sales volume. Chemours expects the segment’s revenue to grow in 2017 due to the demand for Opteon products.

Chemical Solutions segment

The Chemical Solutions segment’s contribution to Chemours’ revenue fell drastically. It represented 9.8% of Chemours’ total revenue in 4Q16. The segment reported revenue of $130 million in 4Q16—a decrease of 49.2% compared to $256 million in 4Q15. The decline in the segment’s revenue was mainly driven by portfolio changes that involved closing and selling businesses during the year.

Investors can invest in Chemours by indirectly investing in the iShares U.S. Basic Materials ETF (IYM). IYM invested 1% of its holding in Chemours. The fund’s top holdings include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON). They have weights of 11.2%, 11.1%, and 7.8%, respectively, as of February 15, 2017.

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