August 06, 2015
The Chemours Company is still very new. After all, it came into existence just weeks ago. Why, then, are we beginning our business transformation so soon?
It is the right thing to do. Chemours was born out of DuPont’s performance chemicals businesses, and we inherited world-leading brands and market positions. At the same time, we inherited a structure and an infrastructure that is unsustainable outside the DuPont family of businesses.
Chemours is a company of tremendous potential. Now, it is up to us to realize that potential and transform the corporation into the company we all want and expect it to be: a company that brings great chemistry to the world while returning value to customers and shareholders around the globe. The transformed Chemours will be simpler, nimbler, faster to market, and built on a foundation of accountability and sustainability.
Point 1—Reduce Structural Costs. We will reduce costs by $200 million by 2016. By the end of 2017, we will have lowered structural costs by $350 million. Our cost reductions will come from selling, general, and administrative expenses (SG&A), and fixed plant outlays.
Safety will always sit at the center of our plant expenditures, and we will also look to invest in those facilities critical to meeting our customer’s needs. Lowering our fixed costs in this way will improve our profitability in every one of our business segments.
“We’re trying to improve the underlying profitability of the business by reducing fixed costs.”—Mark Newman, CFO
Point 2—Grow Market Positions. Chemours already has strong market positions, but there is significant opportunity for growth. We will look at growing our business by capitalizing on the markets where we are strongest. The Opteon™ product line, for example, has huge potential for our customers and will provide us with great growth on top of our already strong market positions. We will expand our cyanides business to meet existing demand and keep up with the encouraging growth of our customers. In addition, our Altamira TiO2 plant will be coming on line, allowing us to support the growth of our titanium dioxide customers.
“We have the #1 TiO2 business in the world—an advantaged business—the #1 Fluoroproducts business, the #1 cyanides business in the Americas. Those are three cards we like a lot.”—Mark Vergnano, CEO
Point 3—Refocus Investments. In order to make the most of our competitive advantages, we need to be more focused in how we invest our limited cash reserves. We will focus on our investable business portfolio—the products and businesses where we have the strongest advantages—rationalizing our annual capital spending to approximately $350 million.
We can’t afford to invest in all the businesses we have today. If we don’t focus, we run the risk of underinvesting in businesses that could be our future.”—Mark Newman, CFO
Point 4—Optimize the Portfolio. We are carefully evaluating our entire portfolio, looking at where we can invest for the future. We are evaluating strategic alternatives in the Chemical Solutions segment and ramping up our investments in response to market demand.
“When we look at our portfolio, we know we want to have a solid, investable portfolio that we know we can grow.”—Mark Vergnano, CEO
Point 5—Enhance Our Organization. Chemours was born with a set of strong values. We will transform our culture to live up to those values we have declared. Chemours will foster an organization based on a culture of accountability. We are emphasizing simpler processes and faster decision-making, and a bedrock commitment to a sustainable future.
"Simplifying decision making and collective entrepreneurship are essential to the transformation of the company. We all must think and act as if we own the company collectively.”—Mark Newman, CFO
This detailed, carefully considered plan is a product of Chemours’ collective entrepreneurship. Our leadership has committed to a $500 million EBITDA enhancement over 2015. By the time 2017 is past, Chemours will have substantially reduced its leverage—down to 3 times net debt to EBITDA ratio, independent of the TiO2 cycle.
As President and CEO Mark Vergnano said, “Now that Chemours has completed its separation from DuPont and is an independent company, we have begun our transformation into a higher value chemistry company. We will drive revenue growth to enhance our leading market positions, cost reductions to create a simpler company, and focus our capital investments on the most promising businesses in our portfolio.”
Our higher value chemistry will deliver great products to our customers, strong returns to our investors, and enable a better standard of living the world over.
See how Chris Siemer is leading the business transformation of Chemours into a simpler, nimbler, higher value chemistry company.
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