Tronox Ltd. (TROX), the largest integrated producer of titanium dioxide, slowed production of the pigment used in paints and plastics after ore costs rose and prices declined in Europe and the Asia-Pacific region.
Earnings before interest, taxes, depreciation and amortization in the second quarter will be about 20 percent less than first-quarter Ebitda of about $151 million, Stamford, Connecticut-based Tronox said today in a statement.
The company processes ore into titanium dioxide, a white pigment used to add opacity to paints and plastics. Second- quarter prices for titanium ore rose $600 per metric ton from the first quarter, outpacing “moderately higher” prices in the global pigment business, Tronox said.
“The largest contributing factors to the relative softness in demand stem from customer reactions to the continued macroeconomic slowdown in, and risks arising from, China and the Eurozone markets,” Tronox said in the statement. The company still sees pigment prices across its operations up about 15 percent this year.
Tronox dropped 3.4 percent to $120.41 at the close in New York. The shares were listed on the New York Stock Exchange on June 18 after the company emerged from bankruptcy last year.
Tronox will initiate a quarterly dividend of $1.25-a-share and will carry out a 5-for-1 stock split on July 20. The company also will repurchase as many as 2.5 million shares, partly funded by new debt, starting “as soon as practical,” Tronox Chairman and Chief Executive Officer Tom Casey said in the statement.
“We therefore continue to expect to add leverage to our balance sheet, a major part of the proceeds of which we expect to be returned to our shareholders either as share repurchases or special dividends,” Casey said. “While we have considered issuing a special dividend as a way to return capital to shareholders, we believe our stock is undervalued at the present trading levels.”
Tronox said it will repurchase $150 million of shares “in the shorter term,” followed by more buybacks after the debt issuance.
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