Rockwood TiO2 performance ‘very unsatisfactory' – CEO

25 October 2012 18:34  [Source: ICIS news]

HOUSTON (ICIS)--Rockwood’s third-quarter performance in its titanium dioxide (TiO2) business was "very unsatisfactory", mainly because of weak demand in China and Europe, as well as higher raw material costs, the CEO of the US-based chemicals firm said on Thursday.

However, Seifi Ghasemi said that Rockwood believes that TiO2 markets have bottomed out.

While the fourth quarter will be similar to the third, with TiO2 prices likely to decline further, from 2013 onwards Rockwood expects to see the business improving again, Ghasemi told analysts during the company's third-quarter results conference call.

Rockwood’s third-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in its TiO2 business fell by 63.2% year on year to $27.6m (€21.3m) on a 9.1% decline in sales, to $229.6m.

Third-quarter TiO2 volumes were down 25% year on year from the 2011 third quarter, but unchanged sequentially from the 2012 second quarter, Ghasemi said.

Rockwood’s TiO2 prices were up 11% year on year in the 2012 third quarter from the same period last year, but prices were down about 4% sequentially from the 2012 second quarter, Ghasemi said.

The company's third-quarter TiO2 raw material costs were significantly higher, both year on year and sequentially, he added.

Rockwood does not expect a significant change in TiO2 demand in the fourth quarter and therefore operates its plant at only about 60-65% of capacity to reduce its inventories, he said.

“We believe this significant slowdown in demand is due to material weakness in construction in China, weak demand in Europe, and customers’ attempts to operate at minimum inventories,” Ghasemi said.

“We expect these trends to continue in the fourth quarter, but as we move forward, with improved demand in China, the expected pick-up in the housing sector in the US, and our customers need to replenish their inventories, we continue to be optimistic about the future of this business in the long term,” he said.

Ghasemi added that longer-term the company does not see TiO2 as a core business and “constantly reviews its options” with a view of disposing of it. The business contributed about 25% to Rockwood’s overall 2012 nine-month sales of $2.68bn.

Earlier this week, DuPont executives also said that they expect the TiO2 business to begin improving next year, driven by higher infrastructure investments in China and elsewhere in Asia, a stabilisation in Europe, as well as a stronger US housing market.

($1 = €0.77)

By: Stefan Baumgarten
+1 713 525 2653

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