Kronos: Fresh coat

Research evidence excerpt

J P M O R G A N

Europe Credit Research

19 August 2026

Kronos

Underweight

KRO

Fresh coat

Kronos (KRO, B3/B-) reported Q2 2026 results that were stronger than our

expectations, with EBITDA more than doubling YoY and improving sharply QoQ

as Middle East-related supply and shipping disruptions led to an increase in

volumes and to higher average selling prices QoQ, despite still-subdued

underlying TiO₂ demand. FCF turned positive and net debt declined QoQ.

Management, while still flagging North American softness and elevated costs,

now expects FY 2026 profitability to improve vs. 2025 and liquidity to increase by

year-end. We recognize that the near-term pressures embedded in our previous UW

case have now eased, but with the 9.50% €29s now trading above par (8.7% YTW)

following a strong rally, we remain UW as the current earnings recovery remains

vulnerable to renewed European pricing pressure and softer volumes from Q4 in

our view.

Strong Q2 2026 results. Kronos reported Q2 2026 EBITDA of $53m, up

+138% YoY from $22m in Q2 2025 supported by higher volumes (+16%

higher TiO₂ volumes), and lower costs from cost-reduction initiatives. The

volume improvement reflected TiO₂ restocking as customers sought supplychain security during geopolitical uncertainty. FCF was positive at $37m,

supported by a strong net working capital unwind.

Leverage decreases. Net debt (including leases and excluding pensions)

decreased to ~$558m from ~$594m in Q1 2026. Net leverage remains optically

high at ~24.0x on an LTM EBITDA basis, reflecting the depressed Q4 2025

print still in the calculation, but liquidity has improved to ~$259m ($27m in

cash), which management expects to improve over the remainder of the year.

Covenant compliance and liquidity are therefore no longer the immediate

concern, but the balance sheet still leaves limited tolerance for a reversal in

TiO₂ pricing or demand.

Improved 2026 outlook. Management expects FY 2026 net sales, gross

margin and operating income margins to improve vs. FY 2025, supported by

a favourable order backlog entering Q3, ongoing price increases and

surcharges, and the benefit of lower-cost 2026 inventory. Overall demand

…