US Tronox to continue cost-cutting in Q3

30 July 2008 21:55  [Source: ICIS news]

HOUSTON (ICIS news)--US pigment maker Tronox will continue to focus on cost-cutting measures after reporting a net loss of $34.4m (€22m) for second-quarter 2008, the company said on Wednesday.

Its strategy includes the pursuit of price increases of 11-13%, negotiating lower transportation and energy fuel surcharges and continuing to monetise its stranded assets, officials said during the company's second-quarter earnings webcast.

Those stranded assets included the Q2 sale of two land parcels in Henderson, Nevada, and Oklahoma City, Oklahoma.

There was no question-and-answer period after the session because "as we continue to evaluate strategic alternatives for improving our business ... we are not prepared ... to answer questions regarding this process, our strategies or long-term outlook," said Robert Gibney, vice president of corporate affairs.

One of those strategies was the company's recent credit waiver, a tool the company said it might try to employ in 2009.

Tronox repeatedly said it could not predict whether it would be able to achieve its financial covenants in the first part of next year as a result of high raw materials costs, market uncertainty and more stringent financial covenants.

Although there was a small gain in North American pricing in June, Gibney said that increase and price hikes in the stronger markets of Asia, Europe and Latin America were insufficient to offset rising raw material and production costs.

North American contract prices for TiO2 were at 101-111 cents/lb ($2,227-2,447/tonne, €1,425-1,566/tonne), according to global chemical market intelligence service ICIS pricing.

Among cost-cutting measures was a 60% reduction in the company's annual domestic caustic soda usage, although prices are 50% higher than a year ago, Gibney said.

Tronox also predicted annual savings of more than $500,000 by negotiating lower transportation and fuel surcharge rates on inbound process chemicals, annualised savings of more than $1m due to changes in finished goods storage methods and expected savings of more than $500,000 this year through the implementation of new domestic motor carrier rates.

Other US TiO2 producers include Cristal Global, Kronos, Huntsman and DuPont.

($1 = €0.64)

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By: Larry Terry
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