Hello and welcome to your early week international coatings industry update, brought to you by SpecialChem. The BIGS are beginning to post financials, and while results are all positive, nobody seems overly confident that they will continue.
Sherwin-Williams' second-quarter earnings rose 15% as the paint company reported continued sales improvement over last year's slumping levels. The company, whose products include Dutch Boy and Minwax brands, saw sales improve in the prior quarter but remains cautious about skittish consumer spending.
The company reported a second-quarter profit of $181.7 million, or $1.64 a share, from $158 million, or $1.35 a share, a year earlier. The latest period included 8 cents in charges related to debt repurchases. Revenue increased 10% to $2.14 billion, one-third due to currency changes and acquisitions. Gross margin fell to 45.4% from 46%. Same-store sales grew 5.9% following a 14% drop a year earlier. Sales in its paint store business, its largest by revenue, rose 6.4%.
AkzoNobel said Friday its second-quarter net profit rose 76 percent from a year earlier, thanks to its cost-cutting measures and improved sales amid the recovering global economy. Net profit was euro273 million ($350.8 million), up from euro155 million ($199.18 million) in the same quarter last year. Revenues rose 13 percent to euro3.9 billion ($5 billion) from euro3.45 billion ($4.43 billion).
"While Q2 was clearly a good quarter, Akzo Nobel remains vigilant about the pace and sustainable nature of the economic recovery," the company said in a statement. "Nevertheless, the company is cautiously optimistic about the prospects for the remainder of the year." CEO Hans Wijers said the results show "that we are benefiting from the recovery and our ongoing restructuring."
Cytec said Tuesday that its outlook is positive due to improved worldwide demand, with expected revenue of $3.2 billion to $3.4 billion for 2010, up from a prior range of $2.7 billion to $3 billion. The Woodland Park, New Jersey, USA company also announced second-quarter net income of $61.8 million, compared with a net loss of $24.8 million a year earlier. Cytec said the gains were partly driven by sales growth in all business divisions as the economic environment improved.
The specialty chemicals maker has recently benefited from the improving global economy as well as lower costs and strength in its specialty chemical and building block segments.
South Africa's Freeworld Coatings formerly the target of a takeover bid from private equity group Brait, said it no longer expects another bid from a third party. Freeworld, which makes automotive and industrial paint, said last month another group of investors may be considering an offer to rival Brait's 1.7 billion rand ($228.6 million) bid.
Freeworld says it held a number of discussions with a competing private-equity company but no offer has been made.
Freeworld now believes the bid is only tentative and has advised shareholders it has withdrawn its cautionary notice.
AkzoNobel , the world's biggest paint maker, said Fridat that it will examine all options for its U.S. Glidden brand once an overhaul to improve margins is completed, according to Chief Executive Officer Hans Wijers.
"We're very committed to building that business, to make it healthy and profitable again," Wijers said on a conference call today. "And once we'll get there, we'll take another close look at all the strategic options on the table."
Selling or finding a partner for Glidden could provide a 9% boost to Akzo's market value, industry analysts say. The Dutch company acquired the U.S. unit through its $15.9 billion purchase of Britain's Imperial Chemical Industries at the start of 2008, prior to the slowdown in consumer spending and construction that hurt paint demand.
Wijers last year cut jobs in the U.S. and closed company- owned paint stores to combat higher raw-material costs. Revenue from household paint -- which includes the Martha Stewart Living line sold in Home Depot Inc. stores, as well as fillers and varnishes -- totaled 1.5 billion euros ($2 billion) in the Americas region last year.
"Akzo Nobel's position in the U.S., especially the deco side, is relatively too weak compared with Asia and Europe," said one financial analyst. "If you're the market leader worldwide, then it would be best to also try to be that in the U.S. I expect Akzo to do additional takeovers in the U.S. by the end of this year or by the start of next year."
Akzo said it's continuing an overhaul of its decorative paint operations in Europe amid stagnant sales in the region. The owner of the Dulux paint brand reached its target of increasing profit to 14 percent of sales more than one year ahead of schedule. The company will give an update on its medium-term goals on Sept. 28.
"The developed markets remain challenging," Wijers said. "Raw-material price pressure and shortages are expected to continue into the third quarter. We will keep a careful eye on the trading environment and costs will continue to be managed aggressively."
Demand for performance coatings and specialty chemicals helped offset a weaker U.S. paint market, where Akzo Nobel competes with PPG Industries.
Akzo plans to invest in Brazil and southeast Asia to build out brands in those regions.
Selective acquisitions will continue, Chief Financial Officer Keith Nichols said on an analyst call. A priority is to protect liquidity given uncertainty in the financial markets, though there's no ceiling on the size of an acquisition target, Wijers said.
Akzo agreed last month to sell the remnants of a food- starch business inherited during the purchase of ICI.
Engineers at Oregon State University have made a significant advance toward producing electricity from sewage, by the use of new coatings on the anodes of microbial electrochemical cells that increased the electricity production about 20 times.
The findings, just published online in Biosensors and Bioelectronics, a professional journal, bring the researchers one step closer to technology that could clean biowaste at the same time it produces useful levels of electricity - a promising new innovation in wastewater treatment and renewable energy.
Engineers found that by coating graphite anodes with a nanoparticle layer of gold, the production of electricity increased 20 times. Coatings with palladium produced an increase, but not nearly as much. And the researchers believe nanoparticle coatings of iron - which would be a lot cheaper than gold - could produce electricity increases similar to that of gold, for at least some types of bacteria.
"This is an important step toward our goal," said Frank Chaplen, an associate professor of biological and ecological engineering. "We still need some improvements in design of the cathode chamber, and a better understanding of the interaction between different microbial species. But the new approach is clearly producing more electricity."
In this technology, bacteria from biowaste such as sewage are placed in an anode chamber, where they form a biofilm, consume nutrients and grow, in the process releasing electrons. In this context, the sewage is literally the fuel for electricity production.
In related technology, a similar approach may be able to produce hydrogen gas instead of electricity, with the potential to be used in hydrogen fuel cells that may power the automobiles of the future. In either case, the treatment of wastewater could be changed from an energy-consuming technology into one that produces usable energy.
Researchers in the OSU College of Engineering and College of Agricultural Sciences, including Hong Liu, an assistant professor of biological and ecological engineering, are national leaders in development of this technology, which could significantly reduce the cost of wastewater treatment in the United States. It might also find applications in rural areas or developing nations, where the lack of an adequate power supply makes wastewater treatment impractical. It may be possible to create sewage treatment plants that are completely self-sufficient in terms of energy usage.
The technology already works on a laboratory basis, researchers say, but advances are necessary to lower its cost, improve efficiency and electrical output, and identify the lowest cost materials that can be used.
This research has been supported by the National Science Foundation and the Oregon Nanoscience and Microtechnologies Institute.
"Recent advances in nanofabrication provide a unique opportunity to develop efficient electrode materials due to the remarkable structural, electrical and chemical properties of nanomaterials," the researchers wrote in their report. "This study demonstrated that nano-decoration can greatly enhance the performance of microbial anodes."
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