WILMINGTON, Del.—With the first quarter results in the books, Chemours Co. is shifting its focus to a longer-term strategy that will help contain costs as the COVID-19 pandemic continues to impact businesses around the globe.
The company has pulled its full-year financial guidance, and said it is launching plans to reduce fiscal year costs by $160 million. Additionally, the Delaware-based supplier said it plans to trim $125 million in capital expenditures for the year, reducing its spending to $275 million from $400 million.
"In light of the uncertainty created by this pandemic, we are withdrawing our full-year 2020 guidance. However, Chemours is quickly taking steps to best weather the current conditions, including protocols to safeguard the health and well-being of our employees as COVID-19 runs its course," Chemours CEO Mark Vergnano said in a statement. "At the same time, we have taken decisive action to reduce FY 2020 costs by reducing overhead, discretionary spend and (capital expenditures)."
Overall, Chemours said production facilities were minimally impacted by the spread of the coronavirus. This helped the company generate net sales of $1.3 billion in the first quarter of 2020, a 5 percent drop compared to the same period last year. Adjusted EBITDA across the business fell 1.9 percent to $257 million, Chemours said.
"Our (first quarter) results were consistent with our expectations thanks, in part, to improved operating performance across our network," Vergnano said. "At the same time, we did begin to feel the early impact of coronavirus in some areas of the business."
The Fluoroproducts and Chemicals business units each saw declines in demand during the first quarter, particularly throughout the Asia-Pacific region. But the company was buoyed by a strong performance from its Titanium Technologies segment.
Net sales in the Fluoroproducts segment fell 12.7 percent compared to the first quarter of 2019. Sales reached $600 million in the first quarter of 2020, an $87 million drop compared to the previous year. The average price also fell by 4 percent year-on-year, Chemours said. At the same time, adjusted EBITDA in the Fluoroproducts division fell 11.9 percent to $140 million, a drop of about $19 million compared to the first quarter of 2019.
The Fluoroproducts unit includes the company's Viton-brand line of fluoroelastomers.
The company also said illegal imports of its materials into Europe assisted in depressing prices for its refrigerants. But Chemours improved efficiency at its plant in Corpus Christi, Texas. This helped to lower costs and create greater business efficiency, which ultimately helped to offset the negative impacts of the illegal imports.
Net sales in the Chemical Solutions segment came in at $92 million, a 31 percent drop compared with the same period of 2020. Volumes also were lower compared to 2019, but this was due in part to the 2019 fourth-quarter divestiture of the methylamines and methylamides business.
Reduced raw materials price pass-throughs helped to lower the average prices throughout the chemicals segment, along with a regional customer mix. Adjusted EBITDA, Chemours said, was flat compared to 2019's first quarter, coming in at about $15 million, but reflected a quarter-over-quarter improvement in margins to 16 percent from 11 percent in 2019.