Hello and welcome to your late week international coatings industry update, brought to you by SpecialChem. There are more financial results in this issue, again, all good. It makes a body wonder when payrolls will begin to swell once again.
DuPont reported second-quarter profit that beat analysts' estimates and raised its full-year earnings forecast amid improving global demand. CEO Ellen Kullman cut costs last year and is boosting output as demand rises around the world and across the company's businesses, including auto paints and plastics, crop seeds and materials used to harness solar power. Sales advanced 26 percent to $8.62 billion, driven by a 21 percent increase in sales volumes.
The Asia-Pacific region led year-over-year sales gains with a 47% increase, followed by Canada with a 30 percent rise. The region that includes Europe grew 24%, and U.S. revenue rose 18%. Second-quarter net income more than doubled to $1.16 billion from $417 million a year earlier. Rising car production helped earnings to more than double in the coatings unit, the world's biggest maker of auto paint, and contributed to a sevenfold profit increase in performance materials, which makes plastics for vehicle parts and packaging.
Colorcon Inc., of Harleysville, PA, USA said Monday it acquired Pharmaceutical Coatings Pvt. Ltd. in India. No terms of transaction were disclosed. The company was founded in 1961, has been owned by the private investment management firm Berwind Corp. since 1978. Colorcon's primary market is the pharmaceutical industry for which it makes coatings that allow for the controlled or extended release of a medicine's active ingredient, or that apply a film coating to tablets.
Colorcon employs more than 1,100 people worldwide, and this was its second acquisition in 13 weeks. In April, Colorcon bought NP Pharm and its production facility in Bazainville, France, from Ethypharm S.A., which is based in France and has U.S. offices in Center City. No terms released on that purchase either.
Ferro Corp., a manufacturer of specialty chemicals and materials, said it made a profit of $6.9 million in the second quarter. In the same three months last year, Ferro reported a loss of $12 million. Sales for the quarter that ended June 30 were $543.5 million, a 36% improvement from sales of $399.3 million in last year's second quarter.
For the first half of the year, Ferro reported a profit of $6.7 million, compared with a loss of $32.5 million in the first six months of 2009. Sales increased 37% to $1.04 billion, from $757.1 million a year earlier. Based on the results, the company said it was raising its forecast for 2010 sales to between $1.9 billion and $2 billion, an increase of 15 to 20 percent over 2009.
DuPont Co., the third-biggest U.S. chemical maker, said second-half sales will rise on better-than- expected automobile production and continued demand for materials used in electronics and paint.
Global auto output will increase 17% this year, more than a previous forecast of 13%, Chief Executive Officer Ellen Kullman said today on a conference call. Improved vehicle production helps the coatings unit, the world's biggest maker of auto paint, and the performance-materials unit, which makes plastic for car parts and packaging.
Company sales will increase more than 15% this year, compared with a previous forecast of 10% and a second- quarter gain of 26%, Kullman said.
"We expect the recovery that we've seen in our business to continue, but in a more moderate pace than we've experienced in the first half," CFO Nicholas Fanandakis said on the call. "We're seeing that steady sequential improvement in pretty much all of our businesses."
Sales volumes will increase about 5% in the second half amid improved demand for products used in electronics and coatings, such as titanium dioxide pigment, Fanandakis said. Strong second-quarter demand in the electronics and performance- chemicals units, including products such as solar-cell materials and refrigerants, has continued in the current period, he said.
Second-quarter sales of photovoltaic materials soared 150%, compared with the company's 50% growth target, Kullman said. DuPont has plans to reach more than $1 billion in solar equipment sales by next year.
"The recovery has been stronger, especially in segments like electronics and photovoltaics, than we anticipated as we entered the year," Kullman said.
Sales growth in Greater China, including Taiwan, will slow to 15% in the second half after surging 70% in the first half, she said. Full-year China sales will increase about 40% to $3 billion, the CEO said.
"You are seeing growth returning to a more sustainable pace" in the region, Kullman said.
As a physicist who specialized in coatings after he spent 8 years chasing particles and trying to explain how matter actually works, I am a strong adherent to the adage: "Coatings have a potential application in every material, process and product on earth. Here is further proof. U.S. researchers say they've made a discovery that could bring nuclear fusion reactors and the possibility of clean, almost limitless power one step closer. Guess what? It has to do with coatings.
Scientists at Purdue University in West Lafayette, Indiana, USA have made discoveries critical to understanding reactions between hot plasma inside a fusion reactor and surfaces facing the plasma, a university release said Tuesday.
Their aim is to eventually create coatings capable of withstanding the extreme conditions where the lining comes into contact with the extreme heat of the plasma, the release said.
Researchers are using nanotechnology to modify tiny features in the coating in an effort to create new "plasma-facing" materials tolerant to radiation damage, Jean Paul Allain, an assistant professor of nuclear engineering at Purdue, said.
A major challenge in finding the right coatings to line fusion reactors is that materials change due to extreme conditions inside, where temperatures can reach millions of degrees.
A fusion power plant would produce at least 10 times more energy than a conventional nuclear fission reactor, and because its fuel, deuterium, ("heavy water") is contained in seawater, a fusion reactor's fuel supply would be virtually inexhaustible, researchers say.
In a piece of news related to their financial announcement, Ferro Corp. said it intended to sell senior notes worth $250 million in a bid to repay all outstanding debt under its current credit facility.
Ferro said it will use part of the proceeds from the offering to purchase its 6.50 percent notes due 2013 worth $172.5 million. The company also said it was in talks with its lenders to enter into a new credit facility.
"The remaining net proceeds from the offering, along with borrowings under new credit facility, are expected to be used to repay all borrowings outstanding under the company's existing credit facility," Ferro said in a statement.
Finally, thieves who steal copper cable from British Telecom could find themselves sprayed with an invisible paint that makes it easy for police to identify them.
SmartWater is a sophisticated forensic-marking liquid that has been used successfully in other parts of the UK, leading to more than 1,000 convictions. It is now being deployed in Cumbria.
Traps set in theft hot spots will spray thieves, leaving invisible evidence on their skin and clothing. SmartWater can also be used to mark cable, tools and equipment.
Police sensors can spot traces of the liquid to identify criminals and stolen goods.
Bernie Auguste, head of security for BT's local-network business Openreach, said: "Any criminal targeting the BT network in Cumbria now risks being invisibly tagged with SmartWater.
"That means the police can trace them, and any stolen cable or equipment, back to the scene of the crime."
"We are keen to use this technology in Cumbria where there have been a number of cases of cable theft."
There has been a surge in theft of copper as its value has soared, driven by demand from China.
To give you some idea of the extent of the copper-napping problem in the UK, last year thieves stripped thousands of pounds worth of copper pipes from the old Crown post office in Warwick Road, Carlisle. A botched attempt to steal copper wiring from a quarry at Hallbankgate, near Brampton, in 2007 caused only £4,500 of damage and halted production for three days. In 2008 copper cabling worth £15,000 was stolen from Graco Children's Products in Denton Holme, Carlisle.
The UK's Association of Chief Police Officers has set up a dedicated conductive metal thefts working group to combat the problem, which costs an estimated £770 million a year.
Just so our UK readers don't feel singled-out, copper thefts in the USA topped $2 billion in value in 2009, and caused 9 deaths in the commission of the crimes.
In other news, Glidden Professional Paints and Lakewood-based HomeSphere announced that they have entered into a joint agreement to offer the company's full line of Professional™ paints to HomeSphere's network of builders, using the company's technology-leveraged services ...more
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The German Paint and Printing Ink Association has published a guideline document to inform its members on the responsible handling of nanoscale materials at the workplace ...more
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RPM's net sales of $971.5 million increased 13.3% from the $857.3 million reported a year ago. Organic sales improved 11.2%, including volume increases of 9.0%, a net foreign exchange contribution of 2.5% and acquisition growth of 2.1% ...more about this news
And finally, ALTANA sells the polyurethane foam stabilizers business of its BYK Additives & Instruments division to Evonik Goldschmidt GmbH ...more about this news
Thank you for reading the Industry Letter!
Best, Mark Drukenbrod
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