In 2Q17, Chemours (CC) reported its highest quarterly sales. The company reported sales of $1.59 billion in 2Q17—an increase of 15.20% on a year-over-year basis. In 2Q16, Chemours reported revenue of $1.38 billion. Chemours managed to beat analysts’ estimate of $1.49 billion.
Chemours’ revenue growth was primarily driven by higher volumes. The higher volumes were driven the continued adoption of Opteon refrigerants as a result of regulatory requirements. The price increase in titanium dioxide contributed to Chemours’ overall revenue growth. Divestitures, closing down a reactive metal solutions manufacturing plant at Niagara falls, New York, and the foreign currency hedge had a negative impact on revenues.
Chemours’ growth was led by the Titanium Technologies segment. It reported revenue of $729 million, which implies growth of 22%. The Fluoroproducts segment reported revenue of $710 million, which indicates an increase of 24% compared to the previous year. However, the Chemical Solutions segment was a drag on revenue. It reported revenue of $149 million—a decline of 30% compared to the previous year. The decline was led by portfolio changes and closing down of the above-mentioned manufacturing plant.
Mark Vergnano, Chemours’ president and CEO, said, “Our strong financial performance is a clear reflection of the quality of our business segments, the engagement of our employees, and the loyalty of our key customers. With two years behind us as a stand-alone company, we are seeing the positive effects of our transformation plan paired with improving end markets. Customer preference for our Ti-Pure™ titanium dioxide delivered another strong quarter for our Titanium Technologies business. Opteon™ refrigerants adoption ramp up remains in full force, leading the double-digit volume growth reported within Fluoroproducts. Overall, these resulted in higher volumes and significant margin improvement year-over-year. We are pleased with the strength of the first half and expect to continue this positive trajectory through 2017.”
The strong demand for Ti-Pure titanium dioxide, which is used as a major ingredient for paints and Opteon refrigerants, is expected to continue driving Chemours’ revenue growth. With the controlled operating expense, Chemours’ operating income and operating margins are expected to grow in upcoming quarters.
Investors can invest in the First Trust Materials AlphaDEX Fund (FXZ), which has invested 2.30% of its portfolio in Chemours. The fund’s other holdings include Westlake Chemical (WLK), Cabot (CBT), and Owens-Corning (OC) with weights of 3.50%, 3.40%, and 3.30%, respectively, as of August 3, 2017.
In the next part, we’ll look at analysts’ recommendations after Chemours’ 2Q17 earnings.