Hello and welcome to your late week international coatings industry update, brought to you by SpecialChem. Some lagging financials are being posted, and most look good for the paint industry but strangely not for the financial industry - a dangling dichotomy that I have a real problem getting my brain around, but more of this anon.
Valspar's Q2 profit jumped 36%, topping financial estimates, thanks to new sales of industrial products and cost controls. The company beat most analyst predictions on profit and revenue, but the full-year outlook left some investors disappointed, even though the company raised it from its February prediction.
The Minneapolis, Minnesota, USA-based company earned $76.5 million, up from $56.3 million in the same quarter last year. Excluding restructuring charges, the company posted a profit of 84 cents per share for the quarter ended April 27, a 31% increase from a year ago. Sales rose 4% percent to $1.03 billion from $992.7 million.
Bioformix, a developer of energy efficient sustainable monomer and polymer platforms, announced that it has closed a $13.6 Million Series A-1 round of funding. The new round was led by Braemar Energy Ventures and includes Arsenal Venture Partners, Mitsui Global Investment (MGI) and other investors. Bioformix will use the funding to expand its operations, including R&D, production and commercial sales.
Bioformix is developing a new class of energy efficient, biologically benign by design monomers, resins and polymers utilizing proprietary new monomer chemistry. Bioformix's breakthrough chemistry enables a vast array of plastics, polymers, and resins that polymerize with little or no energy at high speeds. The technology offers enhanced performance and allows manufacturers across a broad range of industries to reduce energy consumption in their processes. The company's platforms provide a wide range of applications including inks, composite binders, fibers, adhesives, and packaging materials.
In research news, scientists at the University of Canterbury in Christchurch, New Zealand have created an industrial process that applies a protective ceramic coating to metal machine parts, which could be used by NASA. Researchers at the Advanced Energy and Materials Systems Lab have demonstrated the new technology, described as a "holy grail" of modern industry, for the first time applying a uniform, robust and adherent ceramic coating to a complex shaped metal part, opening the door to the development of a fully fledged industrial process.
The enabling technology is called Pulsed-Pressure Metal-organic Chemical Vapor Deposition, and was invented by Associate Professor Susan Krumdieck during her PhD thesis research in 1999. It has since been developed into a platform technology with potential applications in industries such as dairy, industrial manufacturing, medical and mining. NASA and international companies such as Teledyne, have already expressed interest in the product by contacting Professor Krumdieck.
The 2012 ACS is in the history books, and I must say that I thought that it was very at the times I attended. I remember in the "bad old days" of the ICE, even though I was pretty good at generating booth traffic, there were times that you could have bowled in the aisles, and nobody seemed compelled to attend on the last day. By Vincentz count, over 7500 attended the show, and I see no reason to doubt that statistic.
Indy is a nice venue, and even though I commuted from Fort Wayne, the hall is very easy to get to and park at. I do miss McCormick in Chicago and Morial in New Orleans, but I have no real need to return to Atlanta, Dallas, St. Louis or Toronto, at least not for a show. The ACS just seems better scaled to the industry than the old shows - thumbs-up to the organizers for this. All in all, I think the third year was the charm - bravo.
As we mentioned earlier in the newsletter, Valspar beat profit forecasts for its Q2, but financial types seemed to feel that it displayed weaker-than-expected sales. Here's the thing -- earnings per share in the quarter jumped 31% to 84 cents, bettering analyst views by 2 cents. Incidentally, Valspar has posted double-digit profit growth for 13 quarters in a row, if you follow such things.
Revenue edged up 4% to $1.03 billion, but that was below analyst estimates of $1.07 billion. The company raised its full-year profit EPS guidance to about $3.25, ahead of forecasts.
Of course, on this news, Valspar shares fell 6.2% to 46.69 in afternoon trading.
The maker of paints and coverings under its namesake Valspar brand, as well as Plasti-Kote, House of Kolor, Cabot Stain and other brands, sells a lot of its product to home improvement chain Lowe's, who will post financial results on May 21.
Lowe's larger rival Home Depot early Tuesday reported Q1 profit rose 30%, in line with analyst estimates. But sales fell short.
Home Depot shares fell 1.6% in afternoon trading to 49.08. Lowe's sank 1 cent to 29.55.
Valspar CEO Gary Hendrickson said growth last quarter was also driven by new business in the industrial products market, better price-to-cost balance and improved productivity. The company continues to benefit from a restructuring last year.
"Our volume trend improved sequentially in both our Coatings and Paint segments in the quarter," Hendrickson said in a written statement.
"Looking ahead to the rest of the year, we are raising adjusted full-year earnings per share guidance to $3.20 to $3.30, reflecting our expectation of further volume growth," he added. Valspar earlier had given guidance of $2.92-$3.12.
Behr Process is the shining star in paint at Home Depot, a competitor of Lowe's. Behr is owned by cabinet and hardware giant Masco, who posted a 7% overall increase, but a 16% increase in their Decorative Architectural products division, of which Behr is a part. Home Depot Inc. reported weaker-than-expected quarterly sales on Tuesday after demand slowed in April following a jump in home improvement projects spurred by warm weather earlier in the year.
So Behr, like Valspar, is outperforming its major distribution channel, too. Now, I'm not a financial genius, but this can't be good in the long term. Sherwin-Williams owns a majority of their own distribution, so they have a whole different set of problems.
Spring is traditionally the biggest selling season of the year for home improvement chains. But this year, homeowners stepped out earlier to take advantage of unseasonably warm winter weather across the United States.
The average transaction price at Home Depot rose 2.2% to $54.51 in the quarter. (Can't say I ever got out of there for $50!) Sales at stores open at least a year rose 5.8 percent globally, including a 6.1% rise in the United States.
Home Depot, which has been quicker to cut costs than rival Lowe's, has benefited as housing demand has picked up in regions where it has a heavy presence. It has also gained from opening more centralized distribution facilities.
The company expects sales to pick up later in the year. It sees fiscal-year sales rising about 4.6%, up from its prior outlook calling for a 4% increase. It raised its profit outlook for the year to $2.90 a share from a prior forecast of $2.79.
In new product news, keeping porous building materials free from stains and water damage has gotten a little easier in the past few years. Thanks to advances in technology, we've seen the advent of things such as spray-on glass and anti-graffiti coatings. Now, Spanish nanotech company Tecnan is offering a nanoparticle-based coating that repels liquid, yet still allows the underlying material to breathe.
The hydrophobic coating, known as Tecnadis, is made by suspending nanoparticles in a liquid carrier - the identity of those particles is a trade secret, although by altering their concentration, the properties of the coating can be fine-tuned for different applications.
When applied to materials such as concrete, ceramic, brick, stone or wood, TECNADIS causes any liquid subsequently applied to them to bead up and roll off instead of soaking in. It doesn't completely seal their pores, however, so air can still pass in and out of them, minimizing moisture retention-related problems such as mold.
The coating is completely transparent, and reportedly won't change the color or surface texture of materials. It stands up to regular cleaning methods, along with UV light exposure, and is said to remain effective for over ten years.
Finally this week, Bayer AG said its Bayer MaterialScience intends to establish a global wind energy competence and development center at its existing site in Otterup, Denmark. The new competence center will spearhead and coordinate the global development activities for advanced materials used in wind energy applications, Bayer noted.
Kim Harnow Klausen has been assigned as lead of the new global Competence Center in addition to his current responsibility as managing director of Bayer MaterialScience A/S, Denmark.
Bayer MaterialScience will bundle the development capabilities from across the company's entire portfolio of polyurethanes, polycarbonates as well as coatings, adhesives and specialties materials, pooling expertise from research and development teams around the world.
Bayer MaterialScience plans to extend its capabilities at the existing polyurethanes systems house site in Otterup, by additionally building on solutions for wind turbine applications that include raw materials for coatings and adhesives, carbon nanotubes, matrix materials and production processes for rotor blades, as well as fiber composite materials and production processes for nacelles.
In other news, BASF Coatings Japan Ltd. will merge with BASF Japan Ltd., effective October 1, 2012. With this merger, BASF Coatings Japan will become the Coatings business unit of BASF Japan and will continue to provide innovative coatings solutions and to further expand its business. With this merger, which follows the merger of BASF Pozzolith with BASF Japan on July 1, will truly add value as one company...more
about this news
BASF Automotive Refinish presented its Distributor of the Year Award to Leading Edge Auto Refinishers, Inc., Phoenix, Arizona, at its annual ColorSource™ Conference in La Jolla, California. ColorSource PREMIER is a program designed by BASF exclusively for single line distributors of BASF refinish paints and coatings. ColorSource PREMIER distributors are key strategic partners with BASF...more
about this news
Leading Solar Glass Suppliers around the world rely on Bürkle's process experience and high-quality Roller Coating Machines for the application of Anti-Light Reflective (AR) Coating Materials onto Glass used as front glass of solar modules. AR coating reduces the reflection of the incoming light and increases the light transmission through the glass...more
about this news
And finally, DKSH and Stepan have signed an agreement under which DKSH's Business Unit Performance Materials, a leading specialty chemicals distributor, provides sales, marketing, logistics, and distribution services to Stepan in South and Western India, Indonesia, Japan, Korea, and the Philippines...more
about this news
SpecialChem4Coatings Members Reactions
Rate and React about this Document
