US Kronos Q2 net income falls 28% to $64.5m on lower sales volumes

09 August 2012 13:21  [Source: ICIS news]

HOUSTON (ICIS)--Kronos’s second-quarter net income fell by 28% year on year to $64.5m (€52.2m), as sales and production volumes fell, the US-based producer said on Thursday.

Kronos’s sales for the three months ending on 30 June rose by 1.5% year on year to $545.3m, as higher average titanium dioxide (TiO2) selling prices were partially offset by lower demand.

Fluctuations in currency exchange rates also impacted net sales, decreasing them by approximately $27m in the second quarter, the company said. Kronos said its average TiO2 selling prices increased by 24% in the second quarter of 2012 compared with the same period last year.

Operating profit was down by 23% year on year to $110.6m during the quarter.

Steven Watson, vice chairman and CEO, said: "As we had expected and previously reported, our production costs have increased significantly, driven primarily by substantially higher feedstock ore costs… Lower customer demand for our TiO2 products resulted in lower sales volumes in the second quarter and first six months of the year."

“Although our average selling prices were significantly higher in the second quarter and first six months of 2012 as compared to the same periods in 2011, our segment profit declined for the quarter, primarily as a result of the lower sales volumes and higher production costs,” he added.

Looking ahead, Watson said: “In the near term, we expect to see intermittent periods of availability and shortage of TiO2 products. While aggregate global demand for TiO2 products has decreased in line with global economic conditions, markets in North America and certain export markets continue to show relative strength."

"With the constraints, high capital costs and extended time associated with adding significant new production capacity, especially for the premium grades of TiO2 products through the chloride process, we believe increased and sustained profit margins will be necessary to financially justify major expansions of TiO2 production capacity," he added.

($1 = €0.81)

By: Franco Capaldo
+44 (0)20 8652 3214

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