PPG Plans Titanium Dioxide Push - Analyst Blog

PPG Industries Inc. ( PPG) announced it is taking all efforts to increase its supply of titanium dioxide, adding to the word wide volume of this raw material. The company's announcement came during its capital markets meeting with financial analysts and investors in New York.

PPG possesses intellectual property and expertise in the production and finishing of titanium dioxide pigment, and the company intends to collaborate with potential partners to develop innovative supply solutions.

Titanium dioxide is a raw material used widely in the paint and coatings industry as pigment for its hiding, durability and whiteness characteristics.

The company also provided its 2012 outlook. In 2012, the company plans to continue to pursue growth in key technology-driven businesses, notably aerospace, automotive refinish and optical, as well as in faster-growing emerging regions. Further, the company intends to maintain its keen focus on cost and operations. PPG, a technology leader in the coatings sector, aims to enhance its position by delivering additional innovative solutions to its customers.

PPG's outlook for global economic conditions in 2012 includes growth in global industrial activity, along with increased global automotive OEM industry production. Moreover, the company believes that global growth rates in the coatings industry will outpace gross domestic product. The company expects lower natural gas costs to continue to benefit PPG in 2012. Further, PPG anticipates a continued slow recovery in the developed regions in residential and non-residential construction markets, and uncertainty in the European region will result in sub par growth.

Recently, PPG released its third-quarter earnings. PPG 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, instill 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.

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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 Nasdaq, Inc.

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

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