PPG earnings rise on volume recovery

MOSCOW (MRC) -- PPG Industries reported third-quarter net income from continuing operations up 21% year-on-year (YOY), to $442 million, on sales down 4%, to USD3.69 billion, said Chemweek.

Adjusted earnings totaled ГЫВ1.93/share, slightly ahead of analysts’ consensus estimate of USD1.92/share, as reported by Refinitiv (New York, New York). Selling prices rose 1.3% YOY, but volumes fell on continuing negative impacts from the COVID-19 pandemic.

“As reported earlier this month, we delivered record operating results in the third quarter, with both of our reportable business segments delivering higher segment income than the prior year, despite continued, negative pandemic-related economic effects,” says Michael McGarry, PPG chairman and CEO. “Strong year-over-year organic sales growth in global architectural coatings and continued cost management drove earnings growth in our performance coatings reporting segment. In addition, our leading technology and service capabilities benefited us as demand for automotive OEM coatings and general industrial coatings began recovering in the quarter, generating strong PPG operating leverage and boosting earnings in our industrial coatings reporting segment."

Performance coatings segment sales declined 3% YOY, USD2.25 billion, while segment income increased 12%, to USD426 million. Architectural coatings segment sales grew across the world, with the strongest increases in EMEA, where volumes rose by 10%. Volumes in aerospace coatings fell 35% YOY, however, due to lower commercial aerospace demand, and automotive refinish coatings volumes declined 10% YOY but increased sequentially.

Industrial coatings segment sales fell 5% YOY, to USD1.43 billion, while segment income was up 23%, to USD253 million. Segment volumes were down 5% YOY, but increased 40% sequentially as demand improved from the second-quarter’s trough. Volumes improved on a sequential basis in automotive OEM and industrial coatings, though volumes remained down on a YOY basis.

PPG expects fourth-quarter sales volumes to fall by “a low-to-mid-single digit percentage,” with differences by business line and region. Adjusted earnings for the fourth quarter are forecast to total USD1.50–1.57/share. “Looking ahead, we are likely to experience normal seasonal trends in the fourth quarter, especially in our European and North American architectural coatings businesses,” McGarry says. “Even with the continued uncertainty from the pandemic we expect overall economic activity to continue to recover, but in an uneven manner."

We remind that Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year.

At the same time, August production of primary polymers rose to 888,000 tonnes against 838,000 tonnes in July due to increased capacity utilisation at ZapSibNeftekhim, Stavrolen and Gazprom neftekhim Salavat. Overall output of polymers in primary form totalled 6,630,000 tonnes over the stated period, up by 15.2% year on year.
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Brenntag to acquire activated carbon firm in Italy

MOSCOW (MRC) -- Brenntag says it has agreed to acquire Comelt (Cernusco sul Naviglio, Italy) and its subsidiary Aquadepur (Cogliate, Italy), reported Chemweek.

The businesses focus on processing, marketing, and distribution of activated and reactivated carbon for applications such as water filtration and purification of air and flue gas. Warehouses and a laboratory in northern Italy are included in the transaction.

The acquired businesses generated combined sales of approximately EUR31.0 million (USD36.6 million) in 2019. Closing of the transaction is subject to certain contractual closing conditions and regulatory approvals and is expected in the fourth quarter.

“With Comelt we have acquired a strong distributor and important market player in the segment of activated carbon,” says Henri Nejade, Brenntag board member and CEO/EMEA and APAC. “The company has an established customer base and broad access to the Italian markets, but also a steady connection to European and Asian suppliers.”

Comelt is a full-service provider for activated carbon, including the collection and reactivation of exhausted activated carbon, according to Brenntag.

“We expect an increasing demand for activated carbon for years to come due to the stricter purity standards for air and water quality,” says Anthony Gerace, managing director/M&A at Brenntag. “(Comelt) has a competitive advantage through its full-service offering regarding activated and reactivated carbon. This is an opportunity for Brenntag to increase our market share in these important high-growth and significant market segments in Italy as well as in other European countries.”

As MRC informed earlier, Brenntag says it has acquired the operating assets of Suffolk Solutions’ (Suffolk, Virginia) caustic soda distribution business. Financial terms of the deal have not been disclosed.

We remind that August production of sodium hydroxide (caustic soda) in Russia were 99,200 tonnes (100% of the basic substance) versus 89,400 tonnes a month earlier, said MRC analysts. Russia's overall output of caustic soda totalled 837,600 tonnes in the first eight months of 2020, down by only 2% year on year.

PP imports to Belarus down by 1.6% in Jan-Aug 2020

MOSCOW (MRC) -- Overall polypropylene (PP) imports into Belarus dropped in the first eight months of 2020 by 1.6% year on year to 72,300 tonnes. Only propylene copolymers accounted for weaker demand, according to MRC's DataScope report.

August PP imports to Belarus rose to 9,500 tonnes, whereas this figure was 7,300 tonnes a month earlier, local companies raised their purchasing of all propylene polymers in Russia. Overall imports of propylene polymers reached 72,300 tonnes in January-August 2020, compared to 73,500 tonnes a year earlier, demand for propylene homopolymer (homopolymer PP) increased, whereas demand for propylene copolymers decreased.

The supply structure by PP grades looked the following way over the stated period.


August imports of homopolymer PP reached 7,100 tonnes versus 6,300 tonnes a month earlier, purchases of injection moulding homopolymer PP in Russia increased. Overall imports of homopolymer PP reached 53,000 tonnes in the first eight months of 2020, up by 7% year on year.

August imports of propylene copolymers to Belarus were 2,300 tonnes versus 1,000 tonnes a month earlier, local companies significantly raised their procurement of injection moulding block-copolymers of propylene (PP block copolymer) from Russian producers. Thus, overall imports of propylene copolymers reached 19,300 tonnes in January-August 2020, down by 19.6% year on year.

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PVC imports to Belarus rose by 26.3% in Jan-Aug 2020

MOSCOW (MRC) -- Overall imports of unmixed polyvinyl chloride (PVC) into Belarus totalled about 32,600 tonnes in the first eight months of 2020, up by 26.3% year on year, according to MRC's DataScope report.

According to the statistics committee of the Republic of Belarus, in August of this year, local converters kept a high level of PVC purchases on the back of high seasonal demand for finished products, the total import figure was 5,700 tonnes, whereas a month earlier it was 5,600 tonnes. Russian PVC accounted for the main increase in purchasing.
Thus, imports of unmixed PVC reached 32,600 tonnes in January-August 2020, compared to 25,800 tonnes a year earlier.
Russian producers with the share of about 83% of the Belarusian market were the key suppliers of resin to Belarus over the stated period.

Producers from Ukraine and Germany with the share of 6% and 8%, respectively, were the second and third largest suppliers.

MRC

Hexcel net income plummets as dramatic volume decline continues

MOSCOW (MRC) -- Hexcel has reported net income down 87.9% year-on-year (YOY), to USD9.7 million, on net sales down 49.9%, to USD286.9 million. Adjusted earnings amounted to a 29 cents/share net loss, short of analysts’ consensus estimate of an 8 cents/share gain, as reported by Refinitiv (New York, New York), said Chemweek.

A dramatic decline in demand from the commercial aerospace sector has significantly impacted the company’s results. “As the year has progressed, the dramatic downturn especially in the commercial aerospace market has become clearer and, as a result, we believe these channel adjustments will take another two to three quarters to work through the system,” says Hexcel chairman and CEO Nick Stanage.

Commercial aerospace segment sales were down 66.6% YOY, to USD128.8 million. Space and defense segment sales fell 0.9% YOY, to USD108.8 million. Industrial segment sales fell 25.8% YOY, to USD49.3 million.

As MRC informed earlier, Hexcel and Arkema have signed a strategic alliance to develop thermoplastic composite solutions for the aerospace sector combining the expertise of Hexcel in carbon fiber and that of Arkema in PEKK. The partnership announced today aims to develop carbon fiber-reinforced thermoplastic tapes to produce lightweight parts for future generations of aircraft. In addition to lightweighting, these new composites will provide lower cost and faster production speeds for customers in the aerospace and the space and defense sectors.

We remind that Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year.

At the same time, August production of primary polymers rose to 888,000 tonnes against 838,000 tonnes in July due to increased capacity utilisation at ZapSibNeftekhim, Stavrolen and Gazprom neftekhim Salavat. Overall output of polymers in primary form totalled 6,630,000 tonnes over the stated period, up by 15.2% year on year.

Hexcel Corporation is a leading advanced composites company. It develops, manufactures and markets lightweight, high-performance structural materials including carbon fibers, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, adhesives, engineered core and composite structures for use in commercial aerospace, space and defense and industrial applications.
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