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Valspar Q3 Up, Elementis Leases Space, Lanxess Q2 Up

Hello and welcome to your late week international coatings industry update, brought to you by SpecialChem. The industry has been very busy since last letter so let's get down to the items at hand.

On Tuesday, Valspar Corp. posted a 21% increase in third-quarter profits over a year ago, beating Wall Street expectations. The Minneapolis, Minnesota, USA-based paint and coating company recorded net income of $86.4 million. With adjusted restructuring charges of 5 cents per share, the company had earnings of 97 cents per share.

Valspar reported third-quarter sales of $1.08 billion, up just one percent over a year ago. The company noted in a news release that, excluding negative currency swings affecting international business, sales were actually up 3% during the quarter.

In facilities news, Elementis Specialties announced that they will produce specialty rheological additives and dispersants for water-based coatings at Bayer MaterialScience LLC's New Martinsville, West Virginia, USA plant. Bayer will lease approximately 2.5 acres of land and 48,000 square feet of building space to Elementis for an initial term of 15 years, with Elementis also having expansion and renewal options.

The Elementis operations will result in an as yet undetermined number of new jobs. Construction is scheduled to begin this month, and production is scheduled to start in the fourth quarter of 2012. "We are pleased to expand our presence in West Virginia," said Greg McClatchy, Elementis Specialties president. "The site has easy access to railroads and major highways as well as excellent infrastructure, a skilled workforce and a business-friendly climate. We are looking forward to the opportunities this new location presents for Elementis and for our customers in the coatings industry."

In further financial results, specialty chemicals Group Lanxess continued to grow in their second quarter. EBITDA before exceptional items rose by 6.8% year-on-year to EUR 362 million. Sales advanced by 8.1 percent to EUR 2.42 billion. "We believe these results confirm our view of the seasonal development, and we are therefore adhering to our target of raising EBITDA by 5 to 10 percent for the full year," said Lanxess CEO Axel Heitmann. "Our focus on megatrends and growth regions, combined with our technological expertise, provide stability in an increasingly challenging environment."

"Sales improved mainly as a result of currency effects and selling price increases. Raw material cost increases were fully passed on to the market in all segments. The EBITDA margin pre exceptionals, at 14.9%, was level with the previous year. Net income fell slightly by 3 percent to EUR 176 million due to reorganization measures in the performance chemicals segment."

I heard a news item today regarding a solar farm being built close to my home in Lancaster County, Pennsylvania. It will be enough to power about 290 homes and if it's happening in Southern Lancaster County, it must be very economical to install, because that's how we roll. Prices per kW of solar keep coming down, largely due to innovation in the coatings industry. And innovation continues to come.

A researcher at the University of Houston has developed a special coating for solar panel glass that enhances its self cleaning properties and assists in keeping solar modules operating at their peak efficiency. Developed by physics professor Seamus "Shay" Curran, director of UH's Institute for NanoEnergy, the Self-Cleaning Nano Hydrophobic layer repels water and particles without interfering with the solar panel's ability to absorb sunlight. The coating lasts for years, further reducing the already minimal maintenance required.

"A dirty solar panel can reduce its power capabilities by up to 30%," Curran said. "The coating essentially makes the panel self-cleaning."

While designed for use on solar modules, the Professor believes the material could also have widespread applications as an anti-corrosive coating for other materials. The technology has been licensed by C-Voltaics; a company focused on reducing costs associated with solar energy system servicing and maintenance; which can be significant issues for large scale solar farms.

The Self-Cleaning Nano Hydrophobic material has been tested successfully at the Dublin Institute for Technology and will now undergo field trials being run by an engineering firm in North Carolina.

The coating was developed in conjunction with Professor Curran's work on mobile, off-grid solar-powered generators for residential and commercial use. His Storm Cell unit consists of a trailer with solar panels attached to retractable arms that can be manually unfurled as needed and then stored inside the unit. Storm Cell offers enough power for an air-conditioning system, some lights and a TV.

Professor Curran has worked extensively in solar research. In 2010, the University of Houston received a $1.2 million grant from the Office of Naval Research to improving the efficiency of thin-film solar cells; a project led by Professor Curran. The Institute for NanoEnergy (INE) was set up in recognition of the challenges posed by increased emphasis on energy security.

In Canada, Toronto based Integran Technologies Inc. this week announced the commercial launch of its novel nanostructured multilayer coating technology which provides unprecedented design flexibility in applying unique structural and functional enhancements to a wide variety of finished and semi-finished components including metals, polymers and polymer composites.

Under development for several years with the support of the Canadian Government and the US Department of Defense, Integran's proprietary graded, multi-layer and nanolaminate technology is covered by a number of US and foreign patent filings including the recently issued US 8,129,034 which applies to lightweight articles, precision molds, sporting goods and automotive parts, and covers specific fine-grained metallic coatings and nanolaminates containing Ni, Cu, Co, Fe, Mo, W, Zn, P, B and C.

Klaus Tomantschger, Integran's VP, Intellectual Property and Licensing stated, "Integran is pleased by the US Patent Office's determination that Integran's unique grain-refinement technology also extends to its proprietary multi-layer laminate coating technology".

In the roll coating business, Australian steel manufacturer BlueScope Steel has entered into a 50-50 joint venture deal with Nippon Steel to sell coated steel products to South East Asia and North America.

Nippon Steel will take a 50% stake in BlueScope's operations in Indonesia, Malaysia, Thailand, Vietnam, Singapore, Brunei, Cambodia, Laos and North America. The highlights of the JV are debt reduction and market penetration.

It's a boost for the company and shareholders and investors, but it won't necessarily translate into more production at BlueScope's one remaining steel mill at Port Kembla, NSW.

The JV seems to demonstrate that BlueScope is shifting its focus away from operations in Australia. When you look at steel production internationally, there's been massive over-capacity and over-investment, especially from China and India.

While this news may be middling to the steel industry in Australia, it is a good sign for roll coatings manufacturers in the effected market areas. "There's been a shift in spot price for raw materials (iron ore and coal) and that's significantly eroded the ability of steel companies to earn acceptable returns.

The Valspar Corp. said Tuesday its fiscal third-quarter profit jumped 21 percent, as lower costs helped offset slow sales growth that were hurt by unfavorable currency exchange rates. For the quarter ended July 27, the Minneapolis-based paint and coatings maker earned $86.4 million, or 92 cents per share, up from $67.4 million, or 70 cents per share, in the same quarter last year.

Revenue rose less than a percent to $1.08 billion from $1.07 billion. Excluding the effects of unfavorable exchange rates, the company said revenue increased 3 percent. The company's cost of sales fell 4.3 percent to $714.4 million.

Valspar, like other companies that do significant business outside the U.S., can be hurt by a rising dollar because income earned in foreign currencies shrinks when it's translated back into a stronger U.S. dollar.

The quarter's profit beat Wall Street predictions by a penny, while the sales fell short. Analysts, on average, expected a profit of 96 cents per share on $1.13 billion in revenue.

Valspar said that while it expects demand from some overseas markets to continue to be soft in the fourth quarter, it expects that to be offset by productivity improvements and backed its full-year profit prediction.

Nerolac Paints, one of the largest paint companies in India has launched a 'jingle' recreation contest in association with TalentHouse India, an online platform that provides opportunities for the creative community.

It has partnered with Talenthouse India, a place on the internet where creative people can participate in projects by leading artists or brands and get the opportunity to showcase their skills. The best jingle gets Rs. 1 lakh and 4 runners-up and the most voted entry would receive Rs.25,000 each.

All the details for the jingle recreation contest are downloadable on a Facebook app. The contest is open exclusively to its fans, so the participants must 'like' the page before they can begin. The app is a comprehensive one - it is possible to read all about the brand and its requirements for the new jingle and important contest rules.

You just download the audio file of the jingle and click on Participate when you are ready. A complete entry form with steps to participate, helpful tips, Terms & Conditions, and so on is available. At the bottom is a form with 3 tabs: Upload, Complete profile and Build audience that help you do those.

Nerolac could have gone to an ad agency as it has done in the past. But why not go to the consumers instead. A few brands have already embraced this new phenomenon called crowd sourcing, where brands are inviting their consumers to participate either in the way of a logo redesign, package design or a new promotional spots.

Apart from being cost-effective, crowd sourcing has other benefits as well. It lets consumers 'own' the producer: It is the best approach a brand can adopt to build a sense of 'belongingness' in its community. By letting users 'own' a part of the brand, the brand instills a little bonding in them every time you ask for a new project.

The company also gets to come across as a 'social' brand: Gone are the days when a brand was looked upon as a 'social' brand if it interacted with its consumers on social media. Now is the age when brands have evolved to take social integration far beyond. Fans are being given a strong incentive to be a part of the community.

It gives Nerolac a chance to connect with the next generation: If a brand needs to connect with the younger consumers, it has to be on social media. This is especially true for the brands that have been around for a long, long time like Nerolac. And a crowd sourcing contest creates the required pull for the young and the restless.

It also allows Nerolac to create a social buzz: With the voting system on Facebook, such contests spread through networks. This could increase online visibility which would be an added expense for the brand had it wished to create buzz for its jingle recreation contest through other mediums.

So if you are a lyricist, a music composer or just a jingle fan, then go ahead and check it out. The entry deadline is very soon.

In other news, a special type of glass that can prevent birds from flying into it has been put to use in the UK at a lookout tower off the north-east coast of England. The special bird stopping glass was developed by a German company and is inspired by nature's own spiders and the webs they weave - in particular, the orb-weaver spider... more about this news

Gevo, Inc. announced that the Federal Circuit Court of Appeals granted Gevo's motion to stay a status quo order entered on July 6th by the U.S. District Court in Delaware. The status quo order had prohibited Gevo from selling bio-isobutanol to the automotive fuels market pending Butamax appeal of the District Court's decision denying its motion for preliminary injunction... more about this news

When the 2012 Woodward Dream Cruise kicks off on Aug.18, BASF will be coloring the scene by displaying two specialty vehicles from Trans Am Depot painted with BASF's R-M® OnyxHD™ Waterborne Automotive Finishes. In addition to the two custom vehicles BASF will also feature colors from its Carizzma™ paint line offering a full-range of products that provides users easy application and consistent results... more about this news

And finally, Sherwin-Williams showed its FIRETEX® line of Passive Fire Protection coatings for the first time at the Offshore Technology Conference in Houston. The solvent-free, fast curing M90 Series of intumescent coatings provides hydrocarbon facilities up to three hours of protection on structural steel, decks and bulkheads, pipe supports, process equipment, valves and pressure vessels in the event of a jet or pool fire... more about this news

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