Bloomberg News

Tronox Drops After Reporting Weak Demand for Pigments

November 13, 2012

Tronox Ltd. (TROX:US), a producer of titanium dioxide used in plastics and paper, fell the most in more than a year after “weak” demand and lower volumes for its pigments resulted in lower-than-estimated third-quarter revenue.

Tronox dropped (TROX:US) 19 percent to $15.18 at the close in New York, the biggest decline since Sept. 26, 2011. The shares have tumbled 37 percent this year.

The company reported a net loss of $16.7 million, or 14 cents a share, compared with net income of $98.9 million, or $1.25, a year earlier, Stamford, Connecticut-based Tronox said today in a statement. Sales rose 4.7 percent to $487.3 million, missing the $610.8 million estimate by Los Angeles-based Imperial Capital LLC.

Tronox posted weaker results than competitors because it’s integrating a mineral-sands operation that it acquired in June from Exxaro Resources Ltd. (EXX), said Edward Mally, a New York-based analyst at Imperial Capital.

“Tronox was suffering from higher-than-average feedstock costs because of legacy inventories, and it had some undermarket contracts for the sale of feedstocks, so they got squeezed from two sides on that,” Mally said in a telephone interview. “That’s something that will reverse and unwind over the next six months.”

Sales of pigments, which made up 92 percent (TROX:US) of the company’s revenue last year, fell 30 percent to $279.8 million from a year earlier because of lower volumes, particularly in Asia, Tronox said. The company said it slowed production at its pigment plants because of weak demand.

“While demand for our pigment products has been weak, we believe the fundamental conditions underlying the demand for these products have begun to recover and we believe sales will begin to increase next year,” Chairman and Chief Executive Officer Thomas Casey said in the statement.

The company processes ore into titanium dioxide, a white pigment used to add opacity to paper, plastics and paints.

To contact the reporters on this story: Lydia Mulvany in New York at; Arie Shapira in New York at

To contact the editor responsible for this story: Simon Casey at

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