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Key Takeaways from Chemours' 4Q16 Earnings

PART:
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Part 3
Key Takeaways from Chemours' 4Q16 Earnings PART 3 OF 5

Chemours: Titanium Technologies Segment’s Revenue Rose in 4Q16

Titanium Technologies segment

Chemours’ (CC) Titanium Technologies segment reported revenue of $623 million in 4Q16—an increase of 5.8% compared to $589 million in 4Q15. The Titanium Technologies segment represented 47.5% of Chemours’ total revenue in 4Q16.

Chemours: Titanium Technologies Segment&#8217;s Revenue Rose in 4Q16

Chemours: Titanium Technologies Segment&#8217;s Revenue Rose in 4Q16

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The Titanium Technologies segment posted adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $157 million in 4Q16—an increase of 153.20% compared to $62 million in 4Q15.

Driving factors

The segment’s revenue growth in 4Q16 was primarily driven by the increase in the global average price of titanium dioxide. Titanium dioxide is a key component in manufacturing paints and coatings. Major coating companies like Sherwin-Williams (SHW), PPG Industries (PPG), and Axalta (AXTA) use titanium dioxide as a raw material. Growth in the construction space across the region pushed the demand for paints. As a result, there was an increase in titanium dioxide’s demand and price. However, volumes remained flat.

The segment’s EBITDA growth was primarily driven by cost-saving measures, benefits of lower raw material costs, and the price increase.

Outlook

Chemours expects titanium dioxide prices to improve more in 2017. Titanium dioxide will be the primary factor that drives the Titanium Technologies segment’s revenue.

Investors can indirectly hold Chemours by investing in the iShares U.S. Basic Materials ETF (IYM). IYM invested 1% of its holding in Chemours as of February 15, 2017. In the next part, we’ll look at how the Fluoroproducts and Chemical Solutions segments performed in 4Q16.

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