PPG Industries Inc
) recently said that it is in talks with optical lenses giant
Essilor International regarding the future of their joint
venture, Transitions Optical. The joint venture, which was formed
in 1990, is a leading supplier of photochromic lenses to optical
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PPG INDS INC (PPG): Free Stock Analysis
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PPG Industries holds a 51% stake in the joint venture with
Essilor owning the balance. Transitions Optical represented a
meaningful portion of PPG Industries' Optical and Specialty
Materials division revenues last year.
The Pennsylvania-based coatings giant hinted that its ongoing
discussions with Essilor may lead to a structural change in the
joint venture or possible stake sale. These potential outcomes
may result from a negotiated transaction or exercise of
contractual rights as defined by the joint venture agreement. PPG
Industries said that the discussions may continue over the next
PPG Industries, on January 14, reported higher revenues and
profit for fourth-quarter 2012. Its adjusted earnings matched the
Zacks Consensus Estimate while sales beat. Profit rose 5% year
over year on the back of the company's cost-saving measures. The
company witnessed strong growth in its North American automotive
OEM coatings business in the quarter.
Revenues from the company's Optical and Specialty Materials
segment rose 5% in the fourth quarter. The division accounted for
roughly 8% of its total sales for 2012.
PPG Industries has a diversified business, both in terms of
products offered and geographical presence. It has a leading
position in several paints and coatings end markets. The company
looks to grow its businesses strategically along with controlling
PPG Industries is also taking steps to grow its business
inorganically by making a number of acquisitions. Moreover, it is
pursuing restructuring of its European operation, which is
expected to fetch meaningful cost savings this year.
However, the European market is expected to remain under pressure
and raw material inflation and currency headwinds remains
concerns for the company.
PPG Industries, which competes with DuPont Performance Coatings
), retains a short-term Zacks Rank #2 (Buy). Currently, we have a
long-term Neutral recommendation on the stock.