Hello and welcome to your late week international coatings industry update, brought to you by SpecialChem. There's not a lot going on ahead of earnings announcements that will begin later this week (after you read this), but the news we do have is big and worthwhile knowing. Let's begin in Europe.
Arkema announced plans to acquire an additives and emulsions production site from Brazilian Group Resicryl. Under the terms of the agreement, Arkema would acquire Resicryl's Araçariguama production site on the outskirts of São Paulo, Brazil through its subsidiary Coatex. The new entity is projected to generate $20 million in sales.
The Araçariguama facility was built in 2007. The production plants would gradually be developed to manufacture without delay Arkema's and Coatex's full range of rheology additives and waterborne emulsions, and would offer great development opportunities for the Araçariguama site thanks to the Arkema Group's know-how and technologies. Resicryl would refocus its activity on the distribution and production of a limited range of coatings and latex.
In automotive refinish news, BASF's R-M is planning one of the most modern training centers in Europe which will emerge from the complete restructuring of the Refinish Competence Center in Clermont, France. The European training center in Clermont is known as the home of R-M. During the comprehensive renovation program, R-M is closing the training center from June 2012 until April 2013 in order to redesign it in line with the latest technologies and advanced training concepts.
The design and planning being undertaken by the architects and engineers will be supported by the in-house experts and partner companies in order to tailor the R-M Refinish Competence Center perfectly, to the specific requirements befitting one of Europe's most modern training facilities. "As a premium brand, R-M expects nothing but the best in order to be able to train and educate our clients and their employees here to the highest level and with the best technical equipment," said Ronny Raeymakers, Manager of the Training Center.
Denmark-based Hempel announced the acquisition of Blome International through its US based affiliate, Hempel USA, Inc. This deal is a significant move in achieving the protective growth in the US outlined in Hempel's current growth strategy. "Blome International fits perfectly with our aggressive plan to continue to grow the Oil & Gas, Food & Beverage and Power Segments in North America. Blome International has a solid reputation in the market, a very dedicated and experienced staff and innovative coating solutions," said Lars Johansen, Hempel Group VP, Americas.
"The acquisition will not change Blome International's brand identities and Hempel USA will continue to carry out Blome International's existing objectives in North America," said Malcolm Kerr, Hempel Sales Director for North America. "Beyond products, Blome's unrivalled commitment to excellent customer service makes them very attractive and we will not change this in any way."
We are at the beginning of earnings season. The banks have announced, with the news being not really good. Most institutions made money, but analysts weren't expecting much, so actual performance was lackluster, at best. Next is the chemical industry, and expectations there are not really high there, either.
PPG Industries is scheduled to report its second-quarter 2012 results before trading begins today, Thursday, July 19. Analysts are looking for revenues and earnings for the quarter around $4,200 million and $2.40 per share, respectively. For their part, PPG expects domestic growth in the second quarter to be similar to the first quarter and expects accelerated growth in the emerging markets, influenced by increased industrial activity in China. However, it continues to see sluggish demand in the European markets.
To refresh your memory, PPG beat most analysts' estimates in the past four quarters and most expect this trend to continue into the second quarter. PPG Industries saw growth in each of its coatings businesses in the first quarter. The company's results were aided by strong USA demand and growth across emerging markets, offset by weakness in Europe.
PPG Industries' Performance Coatings and Specialty products businesses have delivered healthy growth over the past few quarters and are expected to continue in the second quarter. Better pricing and lower costs of natural gas are also expected to support results.
PPG Industries has a strong cash position, and continues to utilize cash on earnings growth initiatives. Additionally, the company has been returning cash to its shareholders in the form of uninterrupted dividend payouts. It has also initiated restructuring measures, especially in its European operation, which is expected to fetch cost savings in the back half of 2012.
PPG Industries' strategy of diversifying its business across various products and geographies has come in handy in this economic downturn. However, raw material costs have been a matter of concern for the company's earnings. Although raw material costs have shown a moderating trend, the price of the company's primary raw material TiO2 has been escalating. Their deal in China to provide chloride technology for production of the white stuff may partially ameliorate this situation in the long term, however.
In association news, the American Coatings Association has elected two new members to its board of directors. Frank Sullivan, Chairman and CEO at RPM International Inc. (Medina, Ohio), has been elected Chairman of the board, and Sandra Berg, President and CEO of Ellis Paint (Los Angeles), has been elected Vice Chairman and Treasurer. Both Sullivan and Berg will serve two-year terms on ACA's board, ending in April 2014.
In nanotechnology news, AeonClad Coatings, LLC has announced the company's expansion into a new research and development facility located in Austin, Texas, USA. With the new facility, AeonClad will demonstrate how semiconductor plasma processing techniques and equipment can be adapted to handle a wider range of materials, shapes, and sizes such as powdered plastic additives, consumer apparel, and novel drug formulations. Instrumental to AeonClad's expansion has been the support of a multi-million dollar investment from one of its major industry partners.
Giving AeonClad more than 12,000 sq. ft. of additional R&D space, the new facility will be used for proof-of-concept design studies for novel reactors, reliability and efficiency evaluations, and material performance testing. By adapting semiconductor plasma processing technologies, the novel reactors will have the capability to run high volume, low cost materials thereby bringing precision, low environmental impact (greener), and advanced features that heretofore were not possible with older technologies. The designing and prototyping of novel reactors will support AeonClad's current and future customer development efforts in consumer and industrial materials.
Tony Taylor, AeonClad Coatings President, said, "Our expansion with the north Austin facility provides the bridge between the research and development efforts at AeonClad's laboratories in Austin's Bee Caves, and the full scale production capacity at our New Mexico site. It further strengthens our ability to deliver innovative, market-driven solutions to our customers."
Finally in raft-up news, PPG Industries announced this week that it has received the necessary approvals from Indian authorities to expand its coatings joint venture and also to create a second joint venture with Asian Paints Ltd., India's largest coatings company. Financial terms were not disclosed. We reported this in the last issue, but it was not yet official.
PPG and Asian will expand their current 50-50 joint venture, Mumbai-based Asian PPG Industries, to now serve India's industrial liquid, marine, consumer packaging and transportation coatings customers. PPG and APL also will form a second 50-50 joint venture, Asian Paints PPG Limited, to serve protective, industrial powder, industrial container and light industrial coatings customers.
"The expansion of PPG's more than 15-year successful relationship with Asian Paints will position both companies for accelerated growth in nondecorative coatings to take advantage of the long-term growth of the Indian economy," said Mike Horton, President, PPG Asia Pacific, and Vice President, Automotive Refinish and Architectural Coatings, Asia Pacific.
Both joint ventures leverage PPG's global scale, technology and customer relationships with APL's Indian customer base, manufacturing footprint, distribution channels and local relationships, according to Horton.
PPG will have effective management control of Asian PPG Industries, and Asian will have effective management control of Asian Paints PPG Limited to best utilize the companies' respective strengths for capturing the growth in Indian markets, including infrastructure development, Horton said.
In other news on the site, Enhanced Capital Partners, Inc. announced that it provided $4.4 million of financing to Lapolla Industries, Inc. Lapolla, a leading manufacturer and supplier of insulation foam, coatings, and equipment, focused on commercial, industrial and residential applications in the insulation and construction industries will use the funds for working capital to advance the growth of its business...
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Gevo, Inc. reported on the progress being made at its Luverne, Minn. facility. "We are pleased with the progress to date in our initial startup campaign," said CEO Patrick Gruber, Ph.D. "We've shown that we can successfully ferment isobutanol in large (250,000 gallon) commercial fermenters, isolate the product and get it into tanks and railcars...
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The business line Comfort & Insulation of Evonik celebrated the 10 years anniversary of its local production of Polyurethane Additives (PU) in China at the Shanghai-Xinzhuang Site. Leveraging the state-of-the-art production Evonik has successfully delivered both consistent quality and innovative solutions to the polyurethane industry in Asia, especially in the Greater China region...
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And finally, Dyadic unveiled its latest biofuels enzyme advancement, AlternaFuel® CMAX3™. This next generation product enables the production of cellulosic biofuels and bio-based chemicals from a wide range of renewable non-food feedstocks under broad operating conditions. AlternaFuel® CMAX3™ is the latest generation of a cellulase and hemicellulase complex based on Dyadic's C1 platform technology...
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