Despite 2019 losses, unfazed investors rush to buy Wilmington's Chemours

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A DuPont spinoff company that anchors downtown Wilmington’s job market lost $52 million last year – a drastic change of fortune from 2018 when it made a $1 billion profit. 

Chemours reported the loss on Thursday evening. A day later, its shares surged upward nearly 24%, showing how investors focus on companies’ expected future performances rather than dwelling on their pasts.  

Cutting into Chemours 2019 sales were the illegal imports of a knockoff refrigerant into Europe and weak global demand for a chemical that turns paint white. There was also a $130 million charge to clean up and prevent pollution around the chemical company’s factory in Fayetteville, North Carolina. 

© SUCHAT PEDERSON, SUCHAT PEDERSON/THE NEWS JOURNAL Chemours CEO Mark Vergnano talks about the future of the company and how it will negotiate challenges of foreign competition, environmental lawsuits, and consumer shift away from its anchor products.

In a call with investors Friday, Chemours CEO Mark Vergnano called recent months among the most challenging for his company since its 2015 split from DuPont.

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In addition to financial stresses, Chemours endured congressional scrutiny over past chemical pollution and faced off in a lawsuit with DuPont over which company might have to pay for that contamination from substances that have been a key additive in Teflon.

Still, Vergnano at times sounded triumphant during the call, pointing to recent construction at facilities in Texas, North Carolina and Delaware that he believes will make the company money over the long term.   

“We completed work on our new Chemours’ Discovery Hub at the University of Delaware’s STAR Campus,” he said. “Our new R&D lab is a great story, not just for Chemours, but for the state of Delaware.”

More: Chemours to construct new building, move jobs to University of Delaware’s STAR campus

Two years ago, the company first announced plans to move 330 research and technician jobs to Newark following the construction of the $150 million facility near the University of Delaware. The facility is seen as a recommitment to Delaware by a company that nearly exited the state three years ago. 

Chemours today employs about 1,000 people in Delaware.

© Jennifer Corbett, The News Journal Gov. John Carney shakes hands with Mark Vergnano, president and CEO of Chemours, after Vergnano made the announcement in 2017 that they will be calling Chemour’s site on the University of Delaware’s STAR campus the Discovery Hub. Dennis Assanis, president of the University of Delaware, stands alongside.

Despite loss in the turbulent 2019, Vergnano on Friday told investors that Chemours cash flows began to swing more positive toward that end of the year – momentum that he said should continue through 2020.

Even in the wake of trade wars and the outbreak of a dangerous virus in China, Chemours formally projects its core earnings – before subtracting taxes and other financial items – to again surpass $1 billion in 2020.

“We’ve come a long way since our spin (off) in 2015,” Vergnano said. “I believe this resolve is somewhat unappreciated by the (stock) market.”

More: Chemours HQ space in DuPont building sold for $84 million to mystery buyer

Following his remarks, the market responded, and forcefully. Investors rushed to buy the Wilmington company’s shares, ultimately boosting its value by 24%, or more than half-a-billion dollars by the end of Friday.

Such is the case in the stock market where projected future profits can be more important than past performance, particularly if poor results were expected.

For months, Chemours had telegraphed its obstacles surrounding competitors’ illegal importation of refrigerants into Europe. It piled onto a litany of other financial hurdles, including corporate espionage, scrutiny from environmental regulators and even protests of its planned sodium cyanide plant by residents of a small Mexican town.

More: Chemours exec in charge of controversial chemicals resigns after congressional grilling

© Karl Baker/Delaware News JOurnal The Chemours sign sits above the entrance to the recently renovated DuPont building in January 2019.

In August, Chemours said sales of those illicit refrigerants bit into $125 million worth of cash flows that the Delaware company would have generated from its “crown jewel” refrigerant, called Opteon.

Opteon has a “low global warming potential,” according to regulators, and is one of a family of new substances produced by many American companies that have sought to capitalize on a shift in environmental regulations. 

On Friday, an investment analyst asked whether Chemours a year from now would still “be talking about this as a headwind.”

Responding, Chemours Chief Operating Officer Mark Newman said a number of chemical companies have been pushing law enforcement in Europe to work more decisively to prevent the illegal imports mostly from China.

“I think last week, there was a fairly large seizure in Italy by the anti-fraud agency,” he said. “And, we’re going to continue to build public awareness for what is the equivalent of four coal-fired plants in Europe with all these imported illegal refrigerants.

More: Facing billions in pollution claims, DuPont, Chemours point fingers at the other 

Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.

This article originally appeared on The News Journal: Despite 2019 losses, unfazed investors rush to buy Wilmington’s Chemours