MOSCOW (MRC) -- DuPont Co.is considering a spinoff or sale of its performance chemicals unit, which makes titanium dioxide pigment and Teflon coatings, to focus on less cyclical products and boost shareholder returns, said Businessweek.
DuPont, the biggest U.S. chemical maker by market value, may pursue different paths for each business in the segment, which had sales of USd7.2 billion last year, the Wilmington, Delaware-based company said today in a statement. The unit makes white pigment for paints, cyanide, Freon refrigerants and Teflon coating for nonstick pans, among other products.
"The attractive financial strength and cash-generating capabilities of these businesses must be continuously weighed against their higher volatility, cyclicality and lower growth profile," Chairman and Chief Executive Officer Ellen Kullman said on a conference call.
Under Kullman’s leadership, DuPont has continued its shift away from traditional commodity chemical products toward higher-margin businesses that capitalize on meeting global demand for food, energy and security. The company acquired Danish food ingredients and enzyme maker Danisco A/S in 2011 for about 33.4 billion kroner (USD5.9 billion). DuPont sold its auto paint unit this year for USD4.9 billion.
Volatile earnings from performance chemicals prevent DuPont from realizing the higher valuation inherent in more stable, growing businesses such as agriculture, said Matt Arnold, a St. Louis-based analyst at Edward Jones who has a buy rating on the shares.
The segment’s second-quarter operating profit fell 56% because of lower prices for refrigerants, fluorpolymers and titanium dioxide, a white pigment used in paints and plastics. Titanium dioxide demand has begun to recover, rising 12% from a year earlier, the company said.
The titanium dioxide industry is going through a period of upheaval. Princeton, New Jersey-based Rockwood Holdings Inc.plans to sell or spin off its unit that makes the commodity while Stamford, Connecticut-based Tronox Ltd. said in February it was interested in adding to its titanium dioxide assets. Huntsman Corp., another U.S. producer, has said it wants to participate in the industry’s consolidation.
As MRC wrote before, Huntsman Corp, the U.S. chemicals producer founded by Jon Huntsman Sr., is considering an offer for Rockwood Holdings Inc. titanium-dioxide pigments business. Such a deal would create a titanium-dioxide maker with about 15% of global capacity, vying with Cristal Global as the world’s second-largest, after market leader DuPont Co.
MRC