PPG Commercializes AEROCRON - Analyst Blog


PPG Industries Inc. 's ( PPG ) aerospace coatings group has commercialized its first electrocoat-application primer for global airframe manufacturers and subcontractors to coat parts for commercial, military and general-aviation aircraft.  

Aerocronelectrocoat primer is mainly formulated to help applicators get the most from the electrocoat process, providing a real breakthrough for the aerospace industry in several ways. For the aircraft manufacturers and subcontractors, the electrocoat process can be fully automated. Moreover, it will offer increased material utilization, making it a good 'green' choice. The company's customers are truly benefited as it adds value to finished aircraft by providing better corrosion protection and lighter weight.

PPG's AEROCRON provides better corrosion protection than does conventional spray primer as electrocoating enhances part coverage. It also provides nearly 100% product utilization and reduces primer weight for enhanced aircraft fuel economy while eliminating worker overspray exposure.

Recently, PPG released its third-quarter earnings. The company posted net income of $311 million or $1.96 per share for the third quarter of 2011 compared with $262 million or $1.58 per share in the year-ago quarter. The results surpassed the Zacks Consensus Estimate by 3 cents.

Net sales for the quarter came in at $3.8 billion, up 11% from $3.5 billion in the third quarter of 2010. It was almost in line with the Zacks Consensus Estimate of $3.89 billion. The improvement was attributed to demand improvements, higher pricing in each of its coatings businesses, successful cost reduction initiatives and a gradual industrial recovery worldwide, partly offset by rising raw material costs.

During the quarter, the company announced its agreement to acquire Dyrup A/S.

PPG Industries had cash and cash equivalents worth $1.3 billion as of September 30, 2011 compared with $936 million as of September 30, 2010. Total debt was $3.61 billion as of September 30, 2011 compared with $3.06 billion as of September 30, 2010. Inventories, at the end of the quarter, amounted to $1.7 billion versus $1.6 billion as of September 30, 2010.

The strong third-quarter performance along with successful adoption of growth strategies and their meaningful implementation, instil confidence in the company. In addition, the macro economy and the concerned industry are also showing signs of recovery.

PPG Industries has a short-term Zacks #3 Rank ('Hold'). Currently, we hold a long-term Neutral recommendation on the stock.

PPG faces stiff competition from the DuPont Performance Coatings segment of  EI DuPont de Nemours & Co.  ( DD ) and BASF Coatings AG.

DU PONT ( EI ) DE ( DD ): Free Stock Analysis Report
PPG INDS INC ( PPG ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DD , EI , PPG



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