The Universal Selection Source: Coatings Ingredients


Sherwin-Williams earnings up 12 percent

Mark Drukenbrod – Jan 27, 2011

Hello and welcome to your late week international coatings industry update, brought to you by SpecialChem. Financials for the major paint producers are beginning to trickle in, and to be honest, the news is good and bad --- but the bad news is not terrible, so we can consider ourselves more fortunate than in quarters past.

Sherwin-Williams Co.'s fourth-quarter earnings grew by 12% as higher sales volume and acquisitions helped offset a lower gross margin. Sales volumes increased despite the still-weak housing markets and rising raw-materials costs. Sherwin-Williams reported a profit of $72.9 million compared with $65.3 million a year earlier.

Revenue rose 19% to $1.9 billion as same-store sales grew by 8.6%. Acquisitions increased sales by 8.7%. For the current quarter, the paint maker said it expects a profit of 48 cents to 58 cents a share as revenue rises "in the mid to high teens" over the previous year. For the new year, Sherwin-Williams said it is projecting a profit of $4.65 to $5.05 on a high single-digit sales increase. The Street was looking for $5.08 and an 8% rise to $8.27 billion.

Sales of automobile paint and plastics helped DuPont post a stronger-than-expected quarterly profit, though higher raw material costs raised concern about margin pressure this year. DuPont reported fourth-quarter net income of $376 million compared with $441 million a year earlier. Revenue rose 15 percent to $7.4 billion.

Performance Chemicals revenues climbed 26% to $1.7 billion on a 13% increase in volumes and a 14% rise in prices. The segment saw higher pricing for titanium dioxide. Operating income grew 51.4% to $315 million. Performance Coatings revenues increased 3% to $1.0 billion based on 4% higher volumes and offset by a 1% decline in selling prices due to unfavorable foreign exchange translation. Volumes were driven by improving demand in the automotive OEM markets, particularly in the heavy duty trucks markets, globally and increased demand in the industrial coatings market. Operating income remained almost flat year over year at $71 million.

Asian Paints announced that it will form a second new joint venture with US-based PPG Industries, while expanding their existing JV in order to accelerate growth of non-decorative coatings business in India. APL and PPG have agreed that APL will take lead in the second venture and PPG will take lead in APPG in order to utilize their respective strengths, it said.

The second joint venture will service the protective, industrial powder, industrial containers and light industrial coatings markets. "In partnership with PPG, with whom we have had a very successful collaboration, APL expects that the partners together will be able to take advantage of the rapidly developing Indian economy and serve all customers for non- decorative products in the Indian market," Asian Paints MD and CEO P. M. Murty said. He added, "Through this new approach we will accelerate growth by leveraging PPG's technology and global customer relationships while continuing to build on Asian Paint's customer base, manufacturing footprint, distribution channels and local relationships."

In merger and acquisition news, resin producer HP Polymers Ltd., of Guelph, Ontario, Canada has been purchased by Whitford Worldwide, a U.S.-based fluoropolymer coatings manufacturer.

According to a news release, the deal was finalized earlier this month after HP's former general manager Tom Peta retired at the end of 2010 and Whitford agreed to buy his shares.

The terms of the deal have not been disclosed.

Peta will stay on board part-time as a consultant. David J. Senior has been appointed in his place, and heads an all-Canadian management team that also includes Glenn Beaton, who had already been working at HP Polymers as operations director.

Headquartered in Elverson, Pennsylvania, USA, Whitford has manufacturing facilities in eight countries plus a network of agents in an additional 25 countries HP Polymers reported revenue of about $1,675,000 in 2010. The company employs a staff of approximately eight.

In research news, chemists at Bar-Ilan University in Israel say they have developed and successfully tested "killer paper" coated with silver nanoparticles--each roughly 1/50,000 the width of a human hair--that can fight bacteria such as E. coli and S. aureus.

Described in the American Chemical Society journal Langmuir, researcher Aharon Gedanken says that while colloidal silver is already widely used as an antimicrobial agent, what's new about his team's research is the process by which silver nanoparticles are deposited onto paper to develop antimicrobial properties.

The team was able to control both the thickness of the silver coating and particle size while using ultrasonication to attach the nanoparticles to the paper; because the coatings are highly stable and anchored so strongly to the surface, they are long-lasting.

"What is special about the technique is that the nanoparticles are embedded in the surface in such a way that they are not removed by washings," Gedanken says by e-mail. "Our coated textiles were washed 65 cycles by hospital washing machines...and still revealed antibacterial properties."

While the team must now work toward FDA approval in the U.S., Gedanken says the paper could promote longer shelf life as a food packaging material, and perhaps someday reduce or even do away with the practice of preserving foods through radiation, heat treatment, or low temperature storage.

I must admit to being amused by the lip service being paid in the defense analyst community to the Chinese military's unveiling of their J-20 stealth fighter airplane in December, positing that their technology is based on debris analysis of a US F-117 shot down in Serbia before the turn of the century.

Twelve years later, some of those components may have finally surfaced - in the design of China's new J-20 stealth fighter. If true, and that's a huge "if," the partly USA origin of China's first radar-evading warplane could be both an indictment of the Pentagon's reliance on easily copied high technology, and a potential comfort to their military planners who are even now trying to assess the J-20's impact on Pacific theatre operations.

The J-20 appeared without warning in late December and flew for the first time this month. For weeks, observers from all over the world have debated the J-20's significance. Some are calling it the death-knell for 50 years of U.S. air dominance. Others dismiss it as a visually impressive but militarily useless piece of showmanship.

Oh, please - it may or may not be the latter, but it surely isn't the former. The technology was the best the NATO allies could muster in terms of formulation and design maybe 15 years ago. And even if you are that bankrupt of starting places to develop stealth coatings, why emulate a plane that was shot down by missiles that were considered just passable in the 1960's, even though it did take three?

The Chinese reportedly constructed their invisible jet using in their voluminous research, among other things, parts of the F-117 downed by Serbian air force unit in 1999 during the NATO air strikes. At the time, parts of the downed jet were apparently not treated as valuable war loot which could be exploited for military advantage. Instead, in the atmosphere of celebration caused the jet's downing, anyone could take what they wanted.

Apparently, more folks than the Chinese took the parts. "The Russians took the whole wing", Milovan Azdejkovic, then chief of the department of explosives of the Military-Technical Institute said in a published report.

Local farmers were taking the parts and selling them for 20 to 50 German Marks, while others were trading them as ordinary recycled material.

For their part, the Serbian Ministry of Defense said that they do not believe that the Chinese jet has been developed based on the Stealth technology of the plane downed over Serbia. They also claim that the plane can be seen at the Air Force Museum.

While Croatian retired Admiral Davor Domazet Loso claims that the "invisible" Chinese plane was developed on the basis of parts of the American 'Night Hawk F-117', Aleksandar Vasiljevic, deputy chief-of-staff of the Yugoslav Army Security Service from April 1999 to March 2000, claimed that the Chinese plane should not be associated with the plane downed in Serbia. Everyone has an opinion, largely dictated by their perception of NATO.

The AP reported that one 'Serbian high army official' confirmed that parts of the plane ended in the hands of souvenir collectors and that some of those parts later ended 'in the hands of foreign army attaches'.

Parts of the downed F-117 are exhibited at the Air Force Museum in Belgrade. Zoran Micunovic, Deputy Director of the Museum said once that many foreign delegations, including Chinese, Russian and American ones, visited the museum but none of them expressed any interest in taking a part of the plane.

There are many morals to this story, but the one that rings truest to me as a "paint person" is that time marches on, and much like consumer paint technology, military and countermeasures paint technology advances at a frightening pace. As someone who worked on the manufacturing technology for the original "stealth" paint on the F-117 and more recently on the formulation technology for its 8 generations of replacements, I can tell you that those parts weren't worth recovering for their coatings technological value, or NATO would probably have made an attempt to do so. The other moral is, don't sell paint technology, or the Chinese short. There are many canny coatings scientists working all over the world.

In other news, Tokyo-based Kuraray Co., Ltd. announced the expansion of polyvinyl acetate (PVA) resin production facility at its European subsidiary Kuraray Europe GmbH ...more about this news

Drytac Corporation has expanded into a new larger facility. The new headquarters provides a larger warehouse, customer service and training facility in Richmond, Virginia. The new headquarters also includes a large showroom for Drytac's extensive line of liquid coating equipment including the VersaCoater XL60 wide format UV liquid coater, edge finishing machines and portable displays ...more about this news

IDEX Corporation announced that it has entered into a definitive agreement to purchase Advanced Thin Films, LLC (ATFilms). ATFilms, with approximately $9 million in revenue, specializes in optical components and coatings for applications in the fields of scientific research, defense, aerospace, telecommunications and electronics manufacturing ...more about this news

And finally, The U.S. Department of Agriculture's BioPreferred program announced that a final rule to initiate a voluntary product certification and labeling program for qualifying biobased products will be published in the Federal Register tomorrow. This new label will clearly identify biobased products made from renewable resources, and will promote the increased sale and use of these products in the commercial market and for consumers ...more about this news

Thank you for reading the Industry Letter!

Mark Drukenbrod

Autonomic materials REC


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