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Kronos Worldwide expects sales dip in 2013
31
Jan '14
Kronos Worldwide, Inc.  announced that it is exploring the possibility of accessing the debt capital markets and that it expects to report net sales for the fourth quarter of 2013 of $368.6 million compared to net sales of $396.8 million as reported in the fourth quarter of 2012. 

For the full year of 2013, the Company expects to report net sales of $1,732.4 million compared to net sales of $1,976.3 million in 2012.  The expected decrease in net sales is due primarily to lower average TiO2 selling prices partially offset by higher sales volumes in the full year period of 2013.  The Company's TiO2 sales volumes for the full year of 2013 are expected to be approximately 498,000 metric tons, or 6% higher than the full year of 2012. 

TiO2 sales volumes in the fourth quarter of 2013 are expected to be approximately 101,000 metric tons, or 1% lower than the fourth quarter of 2012.  TiO2 sales volumes in the fourth quarter of 2013 were impacted by the continued lockout of unionized employees at the Company's Canadian TiO2 facility, and the resulting curtailment of production at such facility during the lockout.

A new collective bargaining agreement with the Canadian workforce was reached in December 2013, and production at the facility will resume in the first quarter of 2014. 

The Company's average TiO2 selling prices in the fourth quarter of 2013 are expected to be approximately 10% lower than the fourth quarter of 2012, and average TiO2 selling prices in the full year of 2013 are expected to be 19% lower than the full year of 2012.  The Company's average TiO2 selling prices in the fourth quarter of 2013 were 1% higher as compared to the third quarter of 2013.

The Company also expects to report segment profit in the fourth quarter of 2013 of $1.8 million, compared to segment profit of $4.7 million reported in the fourth quarter of 2012.  For the full year of 2013, the Company expects to report a segment loss of $83.6 million compared to segment profit of $373.8 million in 2012. 

The expected decrease in segment profit in the fourth quarter of 2013 compared to the same period of 2012 is due primarily to the net effects of lower feedstock ore costs, lower average TiO2 selling prices and one-time costs of approximately $9 million resulting from the terms of the new collective bargaining agreement reached with the Company's Canadian workforce mentioned above.  

Such one-time Canadian costs consist principally of a non-cash pension charge of approximately $7 million due to the curtailment of one of the Company's Canadian defined benefit pension plans, and severance and other back-to-work expenses.  The expected decrease in segment profit for the full year 2013 is primarily due to the net effects of lower average TiO2 selling prices, higher raw materials costs, higher sales volumes, a third quarter 2013 litigation settlement charge of $35 million and the one-time Canadian costs. 

The Company's TiO2 production volumes in the fourth quarter of 2013 are expected to be approximately 115,000 metric tons, or 2% higher than the fourth quarter of 2012.  TiO2 production volumes in the full year of 2013 are expected to be approximately 474,000 metric tons, or 1% higher than the full year of 2012.  As previously reported, the Company has been operating its Canadian plant at approximately 15% of the plant's stated capacity with non-unionized management employees following commencement of the lockout in mid-June 2013. 

In addition to the $9 million of one-time costs discussed above, the curtailed production resulting from the lockout resulted in approximately $19 million of unabsorbed fixed production costs and other costs resulting from the lockout charged directly to cost of sales in the second half of 2013. 

Kronos Worldwide


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