The man at the helm of the South Bank’s largest chemicals plant has told how it is “well positioned to meet the challenges of the current situation and perform very well in the recovery that is to come”.
Tronox chairman and chief executive Jeffry N Quinn gave the update as the US-headquartered business posted a strong first quarter performance.
He emphasised the strength of the titanium dioxide producer's cash flow, balance sheet and sources of liquidity, as the key markets of manufacturing and construction shut down around the globe.
Mr Quinn oversaw the completion of the Cristal buy-out a year ago, adding the 165,000 tonne Stallingborough plant to the portfolio - in which it is the third largest globally and biggest in Europe. It makes the whitening agent for products from paper to paint, window frames to toothpaste.
He said: "Tronox is well positioned to meet the challenges of the current situation and perform very well in the recovery that is to come.
"We are focusing on what we can control, protecting our people and preserving our business. As we are monitoring developments in all the regions in which we operate, we are actively engaging with our customers, and continually assessing a range of economic scenarios and their potential impact to our markets, operations and financials. The flexibility gained by our vertically integrated, globally diverse business model and our integrated business planning capabilities, uniquely allows us to swiftly respond to the dynamic conditions."
Tronox’s first quarter is expected to close better than anticipated, due to positive market trends and developments ahead of the Covid-19 impact.
Revenue of $700m (£584m) to (£609m) is expected, with earnings between $160m (£133m) to $170m (£142m), having entered the year buoyed by double the anticipated savings from the £1.27b acquisition.
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Commenting on Tronox’s financial position, Mr Quinn said: "We are comfortable with our current liquidity and have broad flexibility to manage our cash flow. Our balance sheet is solid, with no upcoming maturities on our term loan or bonds until 2024. We also have no financial covenants on our term loan or bonds and only a minor springing financial covenant on our asset-based lending.
“We have the ability to reduce our capital expenditures and manage our working capital that, combined, could unlock over $200 million (£167m) of cash should the need present itself.
"Out of abundance of caution, we provided notice to draw down $200 million of revolving credit loans under our credit facilities as a precautionary measure to increase liquidity and preserve financial flexibility. We plan to repay the amounts drawn when the macro uncertainty subsides. We also remain committed to maintaining the recently increased dividend.”
Mr Quinn added: "Our vertical integration coupled with our diverse, global footprint provides the flexibility for us to leverage our assets to mitigate disruptions, while the regional diversity of our customer base ensures we are not overly dependent on any singular region.
“We are well positioned to successfully manage through this uncertainty and are confident in our global team's ability to safely lead through the ever-evolving global pandemic.
"I want to thank each of our nearly 7,000 global employees for their dedication and focus through these uncertain times. We will continue to work diligently across our sites to operate safely and supply our customers, and ensure we are prepared to take full advantage of the inevitable economic rebound, in whatever form that may be."
Operations briefly stopped during the 2008 recession at the Stallingborough site, with headcount dropped. It now operates around the 400 mark, and was tipped for growth when Mr Quinn visited last summer.