Kronos reports Q2 2017 results

MOSCOW (MRC) -- Kronos Worldwide, Inc. reported net income of USD196.5 million, or USD1.70 per share, in the second quarter of 2017 compared to net income of USD1.7 million, or USD.01 per share, in the second quarter of 2016, as per Euroinvestor.

For the first six months of 2017, Kronos Worldwide reported net income of USD233.3 million, or USD2.01 per share, compared to a net loss of USD2.1 million, or USD.02 per share in the first six months of 2016. We reported higher net income in the 2017 periods as compared to the 2016 periods in part due to higher income from operations in 2017 resulting from the favorable effects of higher average selling prices, higher sales and production volumes and lower raw materials and other production costs. In addition, our results in the 2017 periods include the recognition of a non-cash deferred income tax benefit as a result of a net decrease in our deferred income tax asset valuation allowance related to our German and Belgian operations, as discussed below.

Net sales of USD441.4 million in the second quarter of 2017 were USD85.3 million, or 24%, higher than in the second quarter of 2016. Net sales of USD811.2 million in the first six months of 2017 were USD136.7 million, or 20%, higher than in the first six months of 2016. Net sales increased in 2017 due to higher average TiO2 selling prices and higher sales volumes. The Company's average TiO2 selling prices were 20% higher in the second quarter of 2017 as compared to the second quarter of 2016 and were 19% higher in the first six months of the year as compared to the same prior year period. The Company's average selling prices at the end of the second quarter of 2017 were 8% higher than at the end of the first quarter of 2017, and were 12% higher than at the end of 2016, with higher prices in all major markets. TiO2 sales volumes in the second quarter of 2017 were 6% higher as compared to the same period in 2016 due to higher sales in the North American and European markets, partially offset by lower sales in the Latin American market. TiO2 sales volumes in the first six months of 2017 were 5% higher than the same period in 2016 due to higher sales in the North American and export markets, partially offset by lower sales in the Latin American market. Kronos' sales volumes in the second quarter and first six months of 2017 set a new overall record for a second quarter and first-six-month period. Fluctuations in currency exchange rates (primarily the euro) also affected net sales comparisons, decreasing net sales by approximately USD8 million in the second quarter 2017 and approximately USD15 million in the first six months of 2017 as compared to the same periods in 2016. The table at the end of this press release shows how each of these items impacted the overall increase in sales.

The Company's TiO2 segment profit (see description of non-GAAP information below) in the second quarter of 2017 was USD73.7 million as compared to USD13.4 million in the second quarter of 2016. For the year-to-date period, the Company's segment profit was USD130.2 million as compared to USD17.2 million in the first six months of 2016. Segment profit increased in the 2017 periods primarily due to higher average TiO2 selling prices, higher sales and production volumes and lower raw materials and other production costs. Kronos' TiO2 production volumes were 8% higher in the second quarter and 9% higher in the first six months of 2017 as compared to the same periods in 2016. We operated our production facilities at an overall average capacity utilization rates of 100% in the first six months of 2017 (approximately 100% of practical capacity in the first and second quarters) compared to approximately 96% in the first six months of 2016 (97% and 95% in the first and second quarters of 2016, respectively). Fluctuations in currency exchange rates also affected segment profit comparisons, which decreased segment profit by approximately USD5 million in the second quarter and by approximately USD13 million in the year-to-date period.

Kronos Worldwide, Inc. is a major international producer of titanium dioxide products.
MRC

MOSCOW (MRC) -- US-based Tronox has signed a definitive agreement to divest its Alkali Chemicals business to Genesis Energy for USD1.325bn, said Chemicals-technology.

With its mining and processing facilities located in Green River at Wyoming, Alkali Chemicals focuses on producing natural soda ash that is used in multiple sectors such as glass manufacturing, detergents, baked goods and pharmaceuticals.

Tronox CEO Peter Johnston said: "We were pleased to have received significant interest in our Alkali business from multiple potential buyers.

"Genesis' proposal was the most compelling for its overall value, with its combination of price, favourable contract terms, speed to closing, committed financing, and expected ease of regulatory approvals.

"These considerations, in aggregate, provided the highest level of certainty to Tronox."

In February, Tronox signed a definitive agreement to acquire the TiO2 business of Cristal for USD1.673bn.

The company plans to use the proceeds received from the sale of Alkali Chemicals in funding TiO2 acquisition, which is expected to close in the first quarter of next year.
MRC

MOSCOW (MRC) -- The August contract price of ethylene was settled at the level of July in Europe. Because of this European producers of polyethylene (PE) have rolled over the July export prices for supplies in August in the CIS market, ICIS-MRC Price Report reported.

Negotiations over export prices of European PE to be shipped to the CIS markets began back last week. Many negotiators said that in the majority of the producers from Europe had rolled over export prices of polyethylene at the level of July due to the unchanged price of ethylene. Only in some cases there were attempts to achieve an increase in the price of EUR20/tonne.

Deals for the August shipment of high density polyethylene (HDPE) were discussed in the range of EUR930-1,020/tonne FCA, which actually corresponds to the level of the July deals, despite the serious strengthening of the euro against the dollar.

Deals for European black PE 100 were done in the range of EUR1,170-1,200/tonne FCA. Deals for August shipments of low density polyethylene (LDPE) were negotiated in the range of EUR1,080 - 1,150/tonne FCA, which practically corresponds to last month's prices.
MRC

MOSCOW (MRC) -- Saudi Kayan Petrochemical Co. signed an agreement to reschedule a USD1.2 billion (SAR 4.5 billion) loan with the National Commercial Bank (NCB), said Argaam.

The original agreement was signed in August 2010 and had a seven-year duration, meaning that it was scheduled to be paid on August 16, 2017. The amount was used to finance projects costs, Saudi Kayan said in a statement to Tadawul.

The company also obtained a USD150 million (SAR 562.5 million) facility from NCB to finance project expansions that will allow it to increase production of Ethylene and Pure Ethylene Oxide by at least 93,000 tons and 61,000 per year, respectively, as agreed upon with the Saudi Ministry of Energy.

The facility agreement has a five-year duration, after which it should be repaid in full on August 16, 2022.

Both agreements are Islamic Murabaha facilities and guaranteed by Saudi Basic Industries Corporation (SABIC).

Saudi Kayan has a capital of SAR 15 billion and is an affiliate of SABIC. Kayan’s petrochemical complex, which is located in Jubail Industrial City, is one of the largest in the world.
MRC

MOSCOW (MRC) -- Saudi Arabia will cut crude oil allocations to its customers worldwide in September by at least 520,000 bpd, an industry source said on Tuesday, as the top oil exporter makes good on its pledge to help rein in a global supply glut, as per Reuters.

State oil giant Saudi Aramco will cut supplies to most buyers in Asia—the world's biggest oil consuming region—by up to 10% in September to comply with a producers' deal to cut output, multiple sources with knowledge of the matter told Reuters.

The wider Saudi cuts come as some doubts have emerged about the effectiveness of the OPEC-led agreement. OPEC output hit a 2017 high in July, according to a Reuters OPEC survey, led by a rise in supplies from Nigeria and Libya, which are both exempted from the cuts.

The deal to curb output propelled crude prices above USD58/bbl in January but they have since slipped back to a USD45 to USD52 range as the effort to drain global inventories has taken longer than expected. Rising output from US shale producers has offset the impact of the output curbs, as has climbing production from Libya and Nigeria.

Saudi Arabia's crude allocations to oil majors and some customers in Europe will be cut by 220,000 bpd in September, the first source said, while supplies to the United States will be reduced by around 1.1 MMbbl in total for next month.

In August, a Saudi industry source told Reuters that Saudi exports to the United States will be below 800,000 bpd in August, as the kingdom is capping its exports worldwide this month at 6.6 MMbpd.

Under the OPEC-led supply reduction pact Saudi Arabia is required to cut output by 486,000 bpd. Of the nine Asian refineries surveyed by Reuters, supplies to six have been cut for the first time since the Organization of the Petroleum Exporting Countries, Russia and other producers agreed last year to cut production by about 1.8 MMbpd from Jan. 1 until March 2018.

Saudi Arabia and other producers last month recommended examining whether monitoring compliance with the pact should focus on exports as well as production.

High compliance by Gulf producers Saudi Arabia and Kuwait helped keep OPEC's adherence with its supply curbs at historically high figures of more than 90%.
MRC