Chemical company, PPG Industries Inc. (PPG) announced that it has entered into an agreement with a Chinese company Henan Billions Chemicals Co., Ltd. (Billions). The company signed a memorandum of understanding with Billions that involves the licensing of chloride-based technology for titanium dioxide (TiO2) facilities in China.
The chloride-based TiO2 manufactured by Billions will be used by PPG for a number of end-use applications, including paints and other coatings. As per the deal, the pigment produced under the partnership will be available for sale to third parties.
The deal is also a part of PPG’s initiative to expand its supply of TiO2, which is a raw material used by the paints and coatings companies to provide hiding, durability and whiteness characteristics.
In April 2012, PPG released its first-quarter 2012 results. The company’s adjusted earnings were $1.81 per share in the quarter compared with $1.40 in the year-ago quarter and the Zacks Consensus Estimate of ?. However, profit (as reported) tumbled 94% year over year to $13 million or 8 cents a share due to hefty one-time charges.
Revenues rose 6% year over year to $3,752 million, beating the Zacks Consensus Estimate of $3,696 million. PPG Industries witnessed growth in each of its coatings businesses in the quarter. The company’s results were aided by strong domestic demand and growth across emerging markets, partially offset by softness in Europe.
Moving ahead, the company expects domestic growth in second-quarter 2012 to be similar to that of the first quarter. Further, PPG expects accelerated growth in the emerging markets, buoyed by increased industrial activity in China. However, it feels that the European market will continue to remain under pressure. The company has initiated restructuring measures, especially in its European operation, which is expected to result in cost savings of 20-25 cents per share in the second half of 2012.
PPG competes with EI DuPont de Nemours & Co. (DD). Currently, the company holds a Zacks #3 Rank, which translates into a Hold rating for the short-term.
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