Chemours Targets More Cutbacks

Chemours, the performance chemicals business spun off from DuPont on July 1, says it is reviewing strategic alternatives for its chemical solutions business, excluding cyanides, and that it plans to cut costs, including in R&D, by $350 million through 2017.

The firm also confirms plans to reduce its dividend starting in the fourth quarter to be significantly less than the $100 million it promised investors for the third quarter.

These actions are intended to “reduce costs, grow our market positions, optimize our portfolio, [and] refocus our investments,” says chief executive officer Mark Vergnano. The company revealed the initiatives as it released second-quarter results showing a loss of $18 million on sales of $1.5 billion versus earnings of $116 million on sales of $1.7 billion while part of DuPont a year ago.

To realize a $500 million earnings improvement by 2017, Chemours has adopted what it is calling a five-point transformation plan. It includes reducing fixed costs; improving earnings from its refrigerants, cyanides, and titanium dioxide businesses; a possible exit from businesses such as disinfectants and aniline; capital spending reductions; and a more entrepreneurial culture.

Even before Chemours was spun out of DuPont, it had revealed plans to cut its workforce by 5 to 7%, including R&D personnel. The latest quarterly data show the firm has also ratcheted back its overall investment in R&D. For the quarter ending June 30, Chemours reduced R&D spending by about a third, to $27 million, compared with the year-ago quarter.

Chemours isn’t saying if today’s level of R&D spending—1.8% of sales versus 2.4% a year ago—will be the new norm. However, a spokesman does say the impact of the cost reduction plan on R&D for “our core businesses will be relatively minimal.” He adds that the firm considers R&D “a key component to maintain our competitive advantages, primarily in our fluoroproducts segment.”