Hello and welcome to your early week international coatings industry update, brought to you by SpecialChem. The industry is spooling up for financial announcements, and deals flew thick and fast since out previous editorial, and we have a taste of all of that for you in this issue. Let's start with the money.
PPG Industries Thursday issued its earnings guidance for the first-quarter that is expected to come in ahead of current Wall Street estimates. The company also detailed a restructuring plan to reduce costs, which would layoff of 2,000 jobs, mostly in Europe. The Pittsburgh, PA, USA-based company now expects first-quarter 2012 earnings in a range of $0.02 to $0.07 per share. PPG anticipates adjusted earnings, which excludes non-recurring charges, between $1.75 and $1.80 per share.
CEO Charles Bunch said, "During the quarter, we saw the overall pace of business activity improve compared with the fourth quarter 2011. This trend was aided by modest customer restocking and normal seasonal factors, and lower natural gas costs in the United States are also contributing to our results."
RPM International's Rust-Oleum Group has purchased Australian auto repair and industrial coatings business HiChem Paint Technologies Pty. in order to broaden its reach in Australia. Financial terms were not disclosed. RPM said Wednesday that the transaction is expected to add to its earnings within one year.
HiChem, which is based in Hallam, Australia, has annual sales of about $23 million. The company makes and markets a variety of vehicle repair, general industrial and home maintenance coatings and products for the general consumer and professionals sold under the Motospray and HiChem brands.
The Toyo Ink Group announced last week that it is reinforcing its operating base by collaborating with prominent local corporations in China and India in the organic pigment business. With Toyocolor Co., Ltd., inaugurated on April 1 this year, as the main player in the global deployment, they aim to expand the business with a focus on the emerging nations where rapid growth is expected. Concurrent with the recent rise in demand for published matter, packaging containers, automobiles, consumer electronics and daily necessities in China, India and the emerging nations in Southeast Asia, they also expect demand for organic pigments for inks, paints and plastic colorants to increase.
At the Toyo Ink Group, they are currently producing organic pigment in Japan, China, and France, but by establishing a close-knit partnership through the present business collaboration, they aim to utilize mutual management resources to swiftly build a global supply chain and sales network for organic pigment, and to expand sales in growth markets. They will also establish a structure to supply organic pigment on a local production for local consumption model targeted at the products of other Group companies that are also promoting global development.
When the "2's" came out, your old editor finally broke down and bought an iPad, only my second Apple product. I admit, it saves me a lot of time, and unlike my iPod touch, is good for something other than holding shrill-sounding audio files. As a result of this, I spent some time in the app store, and I found something cool and paint-related. 'Ferinstance, have you ever wondered what your car would look like with a different color scheme? I have. Well, there's now an app for that.
Digital Car Paint allows car owners to customize a paint scheme for their vehicles on their iPad or iPhone. The app offers a choice of over 200 vehicles dating back to the 1930s, including trucks, motorcycles and airplanes, and paint colors from DuPont.
The app was developed as a result of Bestapp Digital president Al Beix searching for a new look for his car, a '33 Ford Hot Rod, he says he "plans to build". It didn't take Beix long to discover that there was nothing on the market that would let car owners digitally paint a vehicle before actually painting it.
"When I realized this, it was immediately clear to me that this is a real need that needs a real solution," he said. "As a result, we set about figuring out how to make this happen, and today, some eight months later, we are releasing the initial program."
Digital Car Paint is available as a free download on the Apple App store. While the download gives users unrestricted access to design tools and colors available, Beix adds only the "paid version" will allow the purchaser to save their work for e-mailing or posting it online. Buying the app will also make available the color names and codes for the "paint" used in the digital customization. We're not talking a ton of money here, and it's a tremendous amount of fun for motorheads.
In regulatory news, the Food and Drug Administration has rejected a petition from environmentalists that would have banned the plastic-hardening chemical bisphenol-A from all food and drink packaging, including plastic bottles and canned food.
The agency said last Friday that petitioners did not present compelling scientific evidence to justify new restrictions on the chemical, commonly known as BPA, though federal scientists continue to study the issue. About 90% of Americans have traces of BPA in their bodies, mainly because it leaches out of food and beverage containers.
The Natural Resources Defense Council's petition was the latest move by public safety advocates to prod regulators into taking action against the chemical, which is found in everything from CDs to canned food to dental sealants.
Some scientists believe exposure to BPA can harm the reproductive and nervous systems, particularly in babies and small children, potentially leading to cancer and other diseases. They point to results from dozens of BPA studies in rodents and other animals.
But FDA reiterated in its response that that those findings cannot be applied to humans. The agency said the studies cited by NRDC were often too small to be conclusive. In other cases they involved researchers injecting BPA into animals, whereas humans ingest the chemical through their diet over longer periods of time. The agency also said that humans metabolize and eliminate BPA much more quickly than rats and other lab animals.
"While evidence from some studies have raised questions as to whether BPA may be associated with a variety of health effects, there remain serious questions about these studies, particularly as they relate to humans," the agency said in its response.
The Natural Resources Defense Council petitioned the FDA in 2008 to ban BPA as a food additive, including all uses in food or beverage packaging. Petitions on various safety issues are routinely filed by advocacy groups, companies and even individuals. When the FDA failed to respond within the required timeframe, the environmental group sued the agency. In December a federal judge ruled that the agency had to respond by the end of March.
The agency's official position is that there is "some concern" about BPA's effects on young children. The government is spending $30 million to conduct additional studies on the chemical's impact on humans. Several federal studies published in the last two years suggest that even human embryos retain far less BPA than other animals.
The vast majority of canned goods in the U.S. are still sealed with resin that contains BPA to prevent contamination and spoiling. Canned food manufacturers have used the chemicals since the 1950s, and the practice is approved by the FDA. The chemical industry says BPA is the safest, most effective sealant.
Some manufacturers have begun switching to alternatives. Heinz reportedly uses BPA-free coatings for its Nurture baby formula cans, and ConAgra and General Mills say they have switched to alternative sealants for some canned tomatoes.
The federal government has been grappling with the safety of BPA for more than four years. The FDA revised its opinion on BPA in 2010 saying there is "some concern" about the chemical's impact on the brain and reproductive system of infants, babies and young children. Previously the agency said the trace amounts of BPA that leach out of food containers are not dangerous.
While older children and adults quickly eliminate the chemical through their kidneys, newborns and infants can retain it for longer. Scientists pushing for a ban on the chemical argue that BPA mimics the effects of the hormone estrogen, interfering with growth.
In financial news, RPM International Inc.'s announced that its earnings shot up by 504% to $6.6 million for its third quarter of fiscal 2012, compared to $1.1 million for the same period last year.
The Medina, Ohio, USA-based manufacturer of Rust-Oleum and other specialty coatings said its net sales grew 14% to $773.6 million for the three months that ended February 29.
That includes an 11.8% increase in sales of industrial products, to $501.9 million; and an 18.2% increase in sales of consumer products, to $271.7 million, which were especially strong compared to sales during last year's long cold and snowy winter.
"In contrast, this third quarter, the seasonally low period for RPM's businesses has had a remarkably warm winter and lack of snow throughout most of North America, and more importantly, a significant uptick in consumer DIY small project paint and patch and repair spending," said Chairman and CEO Frank Sullivan told analysts on Thursday.
He said it's hard to tell how much of that growth is from improved consumer confidence and how much is from the better weather, but said, "We feel there's a little bit of both."
For the first nine months of the year, the company's net profits rose 12.2% to $133.4 million, or $1.02 per diluted share. Net sales for the first nine months rose 11.5% to $2.68 billion.
RPM has acquired six companies this fiscal year, with combined annualized sales of $190 million, including the German company FEMA Farben + Putze GmbH, which makes insulating and finishing systems, and the Australian company HiChem Paint Technologies Pty. Ltd., which makes automotive aftermarket coatings.
Rolith, Inc., a developer of advanced nanostructured coatings and devices, announced last week that it has received Series A funding in the total amount of $5 million from DFJ VTB Capital Aurora and AGC America Inc.
As a developer of nanostructured coatings for renewable energy, green building, and consumer electronics markets, Rolith will utilize the $5 million investment to step up business development in an effort to address the current market need for industrial-scale nanostructured coatings. The US $5 million investments will also be used to expand the engineering team and further research and development.
Rolith coatings are enabled by a proprietary nanolithography system, which offers superior throughput, lower cost and higher quality compared to existing methods. The company was formed by Dr. Boris Kobrin, Prof. Mark Brongersma and Julian Zegelman in 2008.
"We are excited to lead the Series A investment in Rolith, Inc. We believe that the company's proprietary large-scale nanocoating method has great potential to become the new standard for a vast variety of industrial and consumer applications," said Aidar Kaliev, Global Head of Venture Capital at VTB Capital. "The team has an impressive track-record with several nanotech start-ups, combines Russian and US scientific backgrounds and has the necessary skills and experience to lead the company to success."
"We are very fortunate to have the support of world's leading glass producer, Asahi Glass Company Group, and DFJ VTB Capital Aurora, a highly reputable nanotechnology investor associated with one of the major Russia's banking groups, VTB Group," said Boris Kobrin, Founder and CEO of Rolith. "This investment will allow us to scale up our nanostructuring technology to substrate areas larger than what is offered by any competitors and demonstrate feasibility of the first few of our nanostructured coatings."
In addition to announcing that it expects a good year financially, Pittsburgh, PA, USA-based PPG Industries Inc. last week said it plans to slash about 2,000 jobs mainly in its European operations.
The company disclosed the job cuts in a filing with the Securities and Exchange Commission. PPG said it expects to report an after-tax charge of about $164 million in the first quarter related to a business restructuring that will primarily affect employees in PPG's global architectural coatings units and other business and administrative functions in Europe.
In a statement, PPG Chairman Charles Bunch said while business was strong in North America and Asia during the first quarter, demand for coatings in Europe "was muted, and we expect economic recovery to occur slowly in that region."
The first-quarter results, scheduled to be released April 19, also will include an after-tax charge of approximately $100 million for environmental remediation work at a former PPG plant in Jersey City, New Jersey, USA.
In other news, the innovative UP range from LANXESS goes a long way towards meeting these demands: in keeping with the "less is more" principle, it consists of just two Euderm base coat brands and four different top coat components from the Bayderm product line, plus Aquaderm X-Shield UP-L, an anti-soiling product based on fluoropolymers...
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GKN Aerospace researchers at the company's Luton, UK facility are working with a team at the University of Bristol in the UK to explore advanced coatings chemistries that will accurately indicate the existence and extent of damage in composite structure. GKN Aerospace's new coating will contain smart microspheres which will signal in the ultra-violet visible spectrum when damage has occurred...
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PPG Industries' industrial coatings business has announced that it is raising prices by an average of 2 to 10 percent on all its liquid, powder and electrocoat (E-coat) products in the Asia/Pacific region, effective April 1 or as permissible by contract. Sales representatives will communicate price increase details to their customers for all products affected...
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And finally, Univar Inc announced that it has expanded its long-standing European distribution relationship with Dow Corning Europe SA to include distribution its coatings products range in EMEA resion. Following the expansion of the relationship in 2011 to include the additional geographies of Austria, Turkey, the Baltic region, Central and Eastern Europe, and South Africa...
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