PPG Industries (PPG) is investing roughly $40 million to expand its coatings manufacturing facility in Sumare, Sao Paulo, Brazil. The expansion will facilitate the production of resin that will be used to make automotive coating products.
The Brazil facility expansion project will add a 65,000-square-foot plant for resin production. The resin produced at the plant will be utilized to make PPG Industries’ electrocoat products to address increasing demand from automotive original equipment manufacturers (OEMs) and industrial coatings customers in the region.
PPG Industries expects to complete the expansion project next year and plans to add more than 30 jobs at the plant. The expansion, which will allow the coatings giant to localize production, testifies its commitment to meet the needs of its customer in Latin America.
PPG Industries is seeing healthy growth for its automotive OEM coatings business. Volumes from this business rose more than 10% globally in first-quarter 2014 (outpacing the industry growth rate of around 4%) with strong gains registered in key regions.
PPG Industries has a diversified base of products and markets, and looks forward to grow its businesses strategically, while controlling costs. It has been providing electrocoat products to the automotive industry for more than 4 decades, protecting over 300 million vehicles.
PPG Industries should gain from continued strength across North American automotive and aerospace markets. It is taking steps to grow its business inorganically by making a number of acquisitions. The acquisition of Akzo Nobel’s (AKZOY) North American architectural coatings business has reinforced its branded paint product offerings and scale in the North American architectural paint market.
However, PPG Industries remains exposed to a still soft European market, raw material cost pressure and currency headwind.
PPG Industries is a Zacks Rank #3 (Hold) stock.
Other companies in the chemical space worth considering include Compass Minerals International Inc. (CMP) and Koninklijke DSM N.V. (RDSMY). While Compass Minerals retains a Zacks Rank #1 (Strong Buy), Koninklijke DSM sports a Zacks Rank #2 (Buy).
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