Tronox, Chemours, Kronos EPS estimates slashed at Barclays on weaker outlook

Sep. 27, 2022 9:12 AM ETTronox Holdings plc (TROX), CC, KROBy: Rob Williams, SA NY

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Tronox (NYSE:TROX), Chemours (NYSE:CC) and Kronos (NYSE:KRO) will see lower earnings on weaker demand for titanium dioxide, analysts at Barclays said on Tuesday. The bank lowered its estimates for the chemical producers after meeting with an industry consultant and updated guidance from Chemours and Tronox in the past week.

“We see Europe remaining challenging for titanium dioxide producers, as the region deals with the confluence of increased production costs, weaker volume and increased imports from China,” Michael Leithead, analyst at Barclays, said in the Sept. 27 report.

His team this week hosted Gerry Colamarino from TiPMC Consulting for a series of investor meetings about the market for titanium dioxide, a mineral that’s commonly used as a white pigment in consumer and industrial products.

Demand for titanium dioxide will decline 10% from a year earlier during the second half of 2022, and may decline as much as 30% to 40% in Europe because of recessionary pressures, TiPMC forecasts.

The bank maintained ratings of Overweight for Tronox, Equal Weight for Chemours and Underweight for Kronos, while lowering price targets for all three companies based on lower earnings estimates for the current year and subsequent 12-month period.

Tronox and Chemours are “well-positioned to ride out the downturn” in titanium dioxide demand because of their large scale, geographic footprint, technology and operational costs, according to Barclays. Kronos is most vulnerable to reduced profitability because of its exposure to Europe, where energy prices surged as Russia cut supplies of natural gas.

Chemours and Tronox in the past week lowered their guidance because of softer demand in Europe and Asia and higher costs for energy in Europe.

Barclays EPS estimates, Sept. 27
EPS FY1
New Old
Chemours (CC) $5.02 $5.67
Kronos (KRO) $0.82 $1.52
Tronox (TROX) $2.71 $3.29
EPS FY2
New Old
Chemours (CC) $4.89 $6.48
Kronos (KRO) -$0.09 $1.48
Tronox (TROX) $2.52 $3.70

Seeking Alpha contributor Valkyrie Trading Society has a Strong Buy rating on Tronox (TROX) on its cost controls and recovery in demand. Contributor Wolf Report rates Chemours (CC) as a Buy on its valuation.

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