After Chemours spun off from DuPont in 2015, some analysts looked at the deal skeptically.
At the time, DuPont was staring down about 3,500 plaintiffs seeking more than $1 billion for damages related to PFOA pollution from a few of the company’s plants. The situation prompted one analyst to speculate that Chemours was created specifically to declare bankruptcy.
Early earnings reports that showed a loss for shareholders — along with $3.7 billion in starting debt — only made the company’s prospects look gloomier.
But times have changed.
The Q3 earnings report this year showed that shares of the company have more than tripled and Chemours is on track to have its second straight profitable year. What’s behind the boost?
Titanium Dioxide
When Chemours launched, about 98 percent of its operating profit came from its titanium dioxide business that makes paints and pigments. As luck would have it, the industry was about to get a lift from outside forces.
According to a report in The Wall Street Journal, stricter environmental policies in China has shut down many of the country’s titanium dioxide plants — sending prices sailing. In its Q3 earnings report, Chemours said its sales for titanium technologies were up 28 percent versus the same quarter last year.
Opteon
The company has also been buoyed by a major sales increase for its refrigerant, Opteon. Thanks to its “low global warming potential,” Opteum has become the refrigerant-of-choice for all of the major car manufacturers in the EU, and it is becoming increasingly popular in the U.S.
Sales of Opteon have increased so much that it is now almost equal to the company’s earnings for titanium dioxide.
Chemours CEO, Mark Vergnano, told investors on the recent earnings call that he sees a “good solid 10 years of growth” in front of the company for Opteon.
The Lawsuits
So far, the financial fallout from the PFOA lawsuits hasn’t been as bad as predicted. DuPont is now paying for half of a $671 million settlement with plaintiffs in West Virginia and Ohio.
While there are still pending lawsuits that have yet to be resolved, Vergnano told investors that it’s too early to assess what the financial impact could be.
The Innovation Pipeline
Chemours is also keeping an eye on the future by investing in innovation. Last week, the company announced that it is building a 312,000-square foot R&D facility on the University of Delaware campus. Chemours hopes the new space will provide an innovation pipeline and talent research pool the company can utilize to develop new technologies.
