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.
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.
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.”
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.
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.”
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.
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.
Contact Karl Baker at firstname.lastname@example.org 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