Neville Prior 6 May 2011 09:25:13 AMKRONOS WORLDWIDE, INC. ANNOUNCES A PRICE INCREASE FOR ALL TITANIUM DIOXIDE PRODUCTS SOLD OUTSIDE OF NORTH AMERICA AND EUROPE
Kronos Worldwide, Inc. has announced a price increase for all titanium dioxide products sold outside of North America and Europe including among other areas, Asia Pacific, Latin America, Middle East, Africa and Asia. Effective July 1, 2011, prices for all Kronos® titanium dioxide products sold outside North America and Europe will be increased by a minimum of US$300 per metric ton or the equivalent in Japanese Yen. This increase is in addition to the increases previously announced.
KRONOS WORLDWIDE REPORTS FIRST QUARTER OF 2011 RESULTS
Kronos Worldwide, Inc. reported net income for the first quarter of 2011 of $60.3 million, or $1.04 per diluted share, compared with net income of $42.8 million, or $.87 per diluted share, in the first quarter of 2010. Comparability of the Company's results was impacted by higher income from operations in the first quarter of 2011 principally due to higher average TiO2 selling prices and higher sales and production volumes in 2011, as well as a $35.2 million non-cash deferred income tax benefit recognized in the first quarter of 2010, in each case as discussed further below.
Net sales of $420.4 million in the first quarter of 2011 were $100.7 million, or 31% higher than the first quarter of 2010 due primarily to higher average TiO2 selling prices and higher sales volumes, partially offset by the negative impact of fluctuations in currency exchange rates which decreased net sales by approximately $5 million. The Company's average TiO2 selling prices were 32% higher in the first quarter of 2011 as compared to the first quarter of 2010, and were 9% higher at the end of the first quarter of 2011 as compared to the end of 2010, continuing the improvement in selling prices that began in the second half of 2009 and continued throughout 2010. TiO2 sales volumes for the first quarter of 2011 increased 2% as compared to the first quarter of 2010, due to increased availability of product from higher production volumes. 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) for the first quarter of 2011 was $104.2 million as compared with segment profit of $23.3 million in the first quarter of 2010. Segment profit in the first quarter of 2011, which represents a new record for the Company, increased due to higher TiO2 selling prices, higher sales volumes, and higher production volumes. The Company's production volumes in the first quarter of 2011 tied the Company's previous record for a first quarter. These increases were partially offset by higher raw material and maintenance costs, and the unfavorable effects of fluctuations in currency exchange rates which decreased segment profit by approximately $9 million. The Company's TiO2 production volumes were 7% higher in the first quarter of 2011 as compared to the first quarter of 2010, with operating rates at near full practical capacity throughout the first quarter of 2011.
As previously reported, in March 2011 we completed the redemption of €80 million principal amount of the Company's 6.5% Senior Secured Notes due 2013 at the redemption price of 102.167% of the principal amount. Following such partial redemption, €320 million principal amount of the Senior Notes remain outstanding. The Company's results in the first quarter of 2011 include an aggregate $3.3 million charge ($2.2 million, or $.04 per diluted share, net of income tax benefit) consisting of the call premium and the write-off of unamortized deferred financing costs and original issue discount associated with the redeemed Senior Notes.
The Company's income tax benefit in the first quarter of 2010 includes a $35.2 million ($.72 per diluted share) non-cash deferred income tax benefit related to a European Court ruling that resulted in the favorable resolution of certain income tax issues in Germany and an increase in the amount of our German corporate and trade tax net operating loss carryforwards.
Steven L. Watson, Vice Chairman and Chief Executive Officer, said, "Our segment profit in the first quarter of 2011 more than quadrupled from the first quarter of last year. Strong global demand for TiO2 products allowed us to successfully implement further increases in our TiO2 selling prices during the quarter. We have continued to operate our manufacturing facilities at near full practical capacity utilization levels, and set several new internal production records during the first quarter. We believe the significant global shortage of TiO2 products will continue for several years, due to the constraints to adding significant new production capacity, especially for the premium grades of TiO2 products through the chloride process, and the growing worldwide demand for TiO2 products. As a result, we expect our cash flows and profitability to continue to increase beyond 2011."
DuPont Increases Prices
DuPont Titanium Technologies, a part of EI DuPont de Nemours & Co. (DD - Analyst Report), announced a net price increase of 250 Euros per metric tonne, for all DuPont™ Ti-Pure® titanium dioxide (TiO2) grades of all countries in which invoicing is in Euro, namely the countries of Western and Central Europe and the North African region. The price increase comes into effect from June 1, 2011. DuPont Titanium Technologies also announced price increase of $500 per metric tonne for all DuPont™ Ti-Pure® titanium dioxide (TiO2) grades of all countries in which invoicing is in U.S. dollar, namely the countries of Eastern Europe, Middle East and the Sub-Saharan African region.
Global TiO2 markets see sharp price increase
TiO2 has seen a sharp global upward price spiral over the last twelve months. European prices for the pigment increased by €100-200/tonne in the first quarter of 2011. The increase continued a trend seen throughout 2010, when prices soared by €450-470/tonne over the course of the year. According to pricing service ICIS, free delivered NWE (north west Europe) TiO2 prices were trading between €2,300-2,550/tonne in early March.
Asian TiO2 prices jumped by $100-200/tonne (€69-138/tonne) at the beginning of the year to $2,800-3,000/tonne (€1,900-2,100/tonne) CFR (cost and freight) Asia, following the price hike announcements of $150-200/tonne (€100-138/tonne) by major producers in November. Meanwhile, North American TiO2 prices reached $1.30-1.44/lb (€0.80-1.00/lb), up by 6-7 cents from the start of the fourth quarter 2010.
And the titanium dioxide price spiral shows no sign of abating, with major producers announcing plans to implement further global price rises during the second quarter of 2011. Producers say they are forced to seek higher prices as a result of limited capacity, higher raw material costs and stronger demand. They add that prices are still not at a level that would allow for investment in new capacities, which was crucial to ease the restricted supply situation.
In Europe, DuPont and Tronox both announced a €225/tonne hike for Q3, while Kronos was planning to increase prices by €200-250/tonne depending on grade and market segment.
Titanium dioxide markets tightened considerably during 2010 as demand levels recovered sharply from the declined caused by the 2009 downturn. European demand, for example, was down 10% compared to 2008. At the same time, supplies were restrained by a series of plant outages.
In Europe, while TiO2 producers marginally improved inventory levels over the relatively quiet Christmas holiday period, the long-running issues of limited capacity and strong demand from all downstream sectors continued to create tight market conditions. A backlog of orders meant buyers were scrambling for material as suppliers struggled to keep up.
Independent Titanium Dioxide Pigment Price Forecast Expects Continued Growth in 2011
The global TiO2 sector ended 2010 on a strong note with price increases flowing through the market and substantial gains reported in 2011. Current pricing expectations are based on low inventory levels of pigment entering the northern hemisphere’s paint season and undersupply brought on by lack of investment throughout the value chain for several years. TZMI’s Pigment Price Forecast is the only independent forward-looking analysis of the prices for the titanium dioxide (TiO2) pigment and is published quarterly by TZMI. The newly released Pigment Price Forecast Q2 2011 (PPF11Q2) uses a detailed analysis of the global supply/demand balance forward to 2015 to develop its latest five-year regional price forecast. Regional price forecasts are also provided on a quarterly basis for 2011 and 2012. In addition, TZMI has included a scenario analysis with the latest report to illustrate potential changes that could occur during this very volatile market period.
PPF11Q2 further details TZMI’s opinion that 2011 price increases are accelerating faster than experienced during the second half of 2010 and are being adopted by the market. TZMI estimates that the global weighted average price for all TiO2 pigment sold during 2010 increased by 8% year-on-year, increasing the value of the sector by 21%, from US$10 billion to US$12 billion. Value growth will be more substantial in 2011, as widespread changes to pigment manufacturing costs, particularly titanium feedstocks, will be tempered by contractual conditions. Inventory depletion and value chain supply tightness are key factors in the current pricing environment. Producers entered 2011 with low inventory levels and TZMI ascertains stocks were not adequately built during the northern hemisphere winter months. TZMI believes that long-term under investment in capacity and permanent shut downs during the last earnings trough will compromise the ability of producers to add to significantly stocks during 2011. TZMI expects some producers to be unable to meet production targets in 2011 and some TiO2 customers will likely be unable to source desired volumes as a result. “The tight market conditions throughout the supply chain will cause rapid price escalation through 2012 and possibly 2013,” TZMI Senior Consultant Eric Bender said. “TiO2 producers and feedstock suppliers will increase margins in 2011, with the timing of future capacity expansions in both sectors largely controlling the balance of pricing power in the value chain over the next several years. TiO2 producers’ ability to add necessary capacity hinges on feedstock producers’ ability to increase output from existing and new mines and beneficiation plants.”
PPF11Q2 is developed concurrently with TZMI’s Global TiO2 Pigment Producers Comparative Cost and Profitability Study, the benchmark analysis of the leading industry producers. The study covers more than 60 pigment plants spread across 27 countries and covers in excess of 90% of the 2010 output. The study is an independent analysis built up from individual plant cost structures plus an analysis of global pigment trade during 2010. The forecasting of regional pigment prices included in PPF11Q2 is aligned to TZMI’s forecast for pigment plant cash costs.
The major producers of TiO2 pigment are: E.I. du Pont de Nemours & Co; Cristal Global, Huntsman Corporation, Tronox Incorporated, Kronos Worldwide Inc, Ishihara Sangyo Kaisha Ltd and Rockwood Holdings Inc. The major producers of TiO2 feedstock are: Rio Tinto Limited, Iluka Resources Limited, Exxaro Resources Ltd, Bemax Resources Limited, Eramet SA and Kenmare Resources plc.
Daysoft creates the most powerful daily disposable contact lenses on the market
Daysoft has created the most powerful daily disposable contact lenses on the market with a prescription of -25.00D. The daily disposable contact lens manufacturer increased the power range of its Daysoft 58 daily disposable contact lenses after receiving a letter from a 73-year-old woman in Scotland with a prescription of -24.00D who had considerable difficulty wearing monthly replacement soft lenses. Daysoft founder Ron Hamilton asked engineers at his factory in Blantyre to produce a prototype which was created within a few days. The patient, Elizabeth Gallacher from East Kilbride, who suffers from progressive myopia, reported better ocular comfort and vision a few months after changing to daily disposables as well as appreciating the convenience. Daysoft has now launched a full range of high-minus daily disposable lenses to -25.00D, meaning the range extends from +8.00 to -25.00D. The new lenses are double the lens power of the previous most powerful daily disposable contact lenses on the market -12.50D, also made by Daysoft. The lenses are available in 0.25D steps from +7.00 to -7.00D and in 0.50D steps from -7.50 to -25.00D as well as +7.50 and +8.00D and are available now to UK practitioners.
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