Tronox Ltd (NYSE:TROX) has decided to raise prices for some of its products. Will the move cause customer outflow or lead to higher revenue for the company?

Tronox said its Alkali unit is raising the list and off-list prices of all Industrial grade sodium bicarbonate and U.S. Pharmacopeia (USP) products. The prices are going up by $15 a ton.

The company elaborated that the new prices will be effective starting January 2017. But it seems the price review will also be subject to contract terms.

Why the price hikes?

Tronox explained that the decision to raise its prices for its Alkali division has been necessitated by rising costs of manufacturing and regulatory requirements. Although price hikes could turn off some customers and dampen demand for the company’s products, Tronox doesn’t seem to anticipate customer loss following the move. Instead, the company hopes to improve sales in the Tronox Alkali unit.

In the recently reported 3Q16 results, the Alkali segment posted revenue of $194 million, down from $195 million in the same quarter last year. Management said that although volume sales in the segment rose 3% in the latest quarter, lower selling prices impacted the top line. Selling prices in the quarter were down 3%.

 “Our Alkali business returned to adjusted EBITDA and free cash flow levels that overcame and exceeded the series of one-off items that impacted results in the second quarter,” said Tronox CEO Tom Casey at the release of 3Q16 results.

3Q16 results

Overall, Tronox reported revenue of $533 million and adjusted EPS loss of $0.34. Revenue in the latest quarter declined from $575 million in year-ago quarter and $537 million in the prior quarter.

Tronox finished the quarter with cash of $202 million, raising its total liquidity to $470 million.

Dividend distribution

The board of Tronox declared quarterly dividend of $0.045 a share, set for distribution on December 2. The dividend will be paid to shareholders of record as of November 16.

Tronox stock is up more than 140% YTD.