Chemours reports Q2 2023 financial results and announces closure of Taiwan titanium dioxide factory

On July 27th, Chemours released its financial report for the second quarter of 2023 and announced the closure of its titanium dioxide factory in Guanyin, Taiwan.

In the second quarter of 2023, Chemours' three major businesses, including Titanium Technologies, Thermal & Special Solutions, and High-Performance Materials, achieved a net sales of $1.6 billion, with a net loss of $167 million.

In particular, the net sales of the Titanium Technologies business in the second quarter were $707 million, a 27% decrease compared to the same period last year. The adjusted EBITDA was $87 million, a 60% decrease compared to the same period last year, and the EBITDA profit margin was 12%, a decrease of 10 percentage points compared to the same period last year.

The global demand for titanium dioxide was weak in the second quarter, leading to a decrease in Chemours' overall sales. This, combined with the impact of inflation on costs and the decrease in fixed cost yield, directly caused a significant decline in the profit margin of the titanium dioxide business.

In this context, Chemours announced the closure of its Guanyin factory in Taiwan. The closure of the factory will save approximately RMB 50 million in operating costs each year, and can save $15 million per month for the remainder of 2023. It is reported that the Guanyin factory will stop production on August 1, 2023, and will immediately begin to withdraw. Chemours' sales and technical service teams will work closely with affected customers to maintain uninterrupted supply. The company expects that there will be no impact on product or service quality during this transition period, and there will be no supply interruptions.

Chemours expects that the expected recovery of the global titanium dioxide market will be delayed. Considering the imbalance and uncertainty of the global macroeconomic situation, demand in the second half of the year is expected to remain stable, with some improvement compared to the first half of the year.

In the second quarter, the Thermal & Special Solutions business achieved a quarterly operating income of $523 million, a year-on-year increase of 1%, and an adjusted EBITDA of $214 million, which remained the same as the same period last year. The EBITDA profit margin continued to maintain 41%. In the High-Performance Materials business, Chemours achieved a quarterly operating income of $387 million, a year-on-year decrease of 3%, and an adjusted EBITDA of $81 million, a decrease of 24% compared to the same period last year. The EBITDA profit margin was 21%, a decrease of 6 percentage points compared to the same period last year.

Mark Newman, President and CEO of Chemours, said that despite the increasing economic uncertainty, the company's second-quarter performance highlights the strength of its leading business in the industry. In the field of Thermal & Special Solutions, Chemours achieved record net sales and adjusted EBITDA, while in the High-Performance Materials business, Chemours' high-performance solution portfolio demonstrated double-digit growth strength. By closing the Guanyin factory in Taiwan, Chemours can optimize its business structure and further improve profitability without affecting customer demand. It is expected that the cost of Chemours' titanium dioxide business will be significantly reduced in the second half of 2023.

It is understood that the Guanyin factory in Taiwan is an important production factory for Chemours in Asia. The factory was established in 1994 and is located about 30 acres southwest of Taipei City, covering an area of 28 hectares. Through continuous improvement, its production capacity has tripled. The main products of the factory include titanium dioxide powder and dispersed slurry products, as well as by-products such as Kuan Yin Crete.