DuPont does not rule out divesting TiO2 business – CEO

23 April 2013 16:10  [Source: ICIS news]

HOUSTON (ICIS)--DuPont is not ruling out that it may divest its cyclical titanium dioxide (TiO2) business, the company’s CEO said on Tuesday.

“We continually evaluate all of our businesses, and as always, we will do what is in the best interest of the shareholders,” Ellen Kullman said.

Kullman was responding to Deutsche Bank analyst David Begleiter, who, during DuPont's Q1 results conference call, asked if the company still considered TiO2 as a core business.

Earlier this week, Begleiter published a report in which he suggested that DuPont look at selling the business, a move that would be a “game changer” for the company’s share price.

Kullman stressed that DuPont has TiO2 process technologies that give it a “sustainable competitive advantage, no matter where we are in the cycle,” thus generating good cash returns for the company.

But at the same time, TiO2 is a cyclical business, she said. The business’s turns are hard to predict, “and I know that’s what drives everyone to distraction”, she added.

In its Q1 report, DuPont cited substantial price declines in TiO2 as a factor in explaining an 8% year-on-year decline in its total Q1 segment operating earnings.

Q1 TiO2 volume was essentially flat year on year, but increased 8% sequentially from the fourth quarter of 2012, giving DuPont confidence that TiO2 market conditions will stabilise around the middle of 2013, Kullman said.

Hassan Ahmed, head of research at New York-based equities research firm Alembic Global Advisors, said that DuPont’s Q1 TiO2 results were a “pleasant surprise.” The company’s performance chemicals segment, which includes TiO2, improved margins sequentially from the 2012 fourth quarter, Ahmed said in an analysis.

“[DuPont’s performance chemicals] segment results signal that the TiO2 cycle may have bottomed and have a very positive read across for Q1 results at [TiO2 producers] Huntsman and Tronox,” he added.

($1 = €0.77)


By: Stefan Baumgarten
+1 713 525 2653



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