Although the price of titanium dioxide and other raw materials continues to rise, which still puts pressure on the profit of powder coating industry, the global coating manufacturers are more and more confident in the growth of their business due to the double stimulation of North American construction industry showing signs of recovery and the strength of industrial end market (especially automobile industry). Corporate performance report

In the first quarter of this year, coating manufacturers generally reported good results. The first quarter results of PPG industry company and Xuanwei company, two major coatings giants in the United States, showed better than expected results. Among them, the net sales revenue of PPG industrial company increased by 6% year-on-year to US $3.8 billion, and the adjusted net profit reached US $279 million, with a per share performance of US $1.81, far higher than the previous analysts' expectation of US $1.44 per share. Charles E. bunch, President of PPG industries, said: "although the economic situation is still worrying and the pressure of raw material inflation is large, the company's earnings continued to grow in the first quarter of this year, with earnings per share increasing nearly 30% year-on-year. The company's construction coatings business in the United States has been positively affected by the recovery of the construction industry in the United States and the warm winter climate. "

Xuanwei's consolidated net sales revenue in the first quarter increased by 15.1% year-on-year to US $2.14 billion. In the first quarter, the company's diluted earnings per share were 95 cents, compared with 63 cents a share a year earlier.

Industry insiders believe that for coating manufacturers, a good start of this year has been determined, but the construction coating business is still not out of the dilemma. Ritchie Alexander, executive vice president of PPG industries, pointed out that from 2006 to 2011, the company's industrial construction coating sales fell by 20% - 30%. The biggest decline was in mature markets such as North America and Europe, so the company shifted its focus to emerging markets and expanded its business in Brazil, China, Eastern Europe and Africa. The weak market demand has also forced the company to actively take cost reduction measures. PPG recently announced that it will restructure its construction coatings business, cutting 2000 jobs.

"Coating companies are actively taking measures to reduce costs and have already produced results," said Dan morard, President of chemquest, a world-renowned consulting firm for coatings, adhesives and sealants.

The challenge of raw materials is severe

The difficulty of raw material cost rising faced by coating manufacturers is mainly due to the continuous increase of titanium dioxide price. In order to relieve the pressure, coating manufacturers are looking for new technology and formula to reduce the amount of titanium dioxide.

Guillermo nowa, vice president of coatings business of Dow Chemical Company, said that the company is currently committed to developing a new polymer technology to improve the diffusion effect of titanium dioxide in coatings. According to Alexander, PPG industries aims to reduce the use of titanium dioxide by 4% - 6% in the short and medium term. Xuanwei CEO Christopher Connor said that the company is trying to use titanium sulfate, new formula and new technology to partially replace titanium dioxide, aiming to reduce the use of titanium dioxide by 5% - 10%.

In addition, some coating companies try to sign some long-term titanium dioxide supply contracts for hedging. Akzo Nobel and PPG industries have announced plans to establish partnerships with new entrants to the titanium dioxide market.

At the same time, the price of petrochemical raw materials such as propylene is also rising, but the increase is limited. Morard believes that although the increase of propylene price is smaller than that of titanium dioxide, it will continue because the light weight of cracking feedstock in North America and the Middle East reduces propylene production.

Although the cost of raw materials continues to rise, according to the analysis, coating manufacturers usually have the ability to increase the product price to make up for the loss.

End market recovery

 

 

 

The U.S. construction market began to recover from the trough, while coating manufacturers are also actively expanding other markets. Guillermo nowa, vice president of Dow Chemical coatings business, said that in emerging markets, the rapid development of the economy is stimulating the rapid growth of coating demand.

 

 

 

According to Alexander, the demand of end markets such as food and beverage packaging is relatively stable, because these consumer goods markets are relatively independent and less linked to the economic cycle. In addition, aviation coatings business performance is also relatively strong. As the main paint terminal market, automobile industry is also recovering rapidly. Guillermo Novak shares the same view, saying Dow's automotive coatings business is starting to turn around as the auto industry recovers.

 

 

 

According to the data center of American Automobile News, the total sales volume of American automobiles in March was 1.405 million, an increase of 12.7% over March 2011; the total sales volume in the first quarter of this year was 3.467 million, an increase of 13.3% over the same period of last year. As a result, U.S. auto paint sales are growing at double-digit rates, morard said. For paint manufacturers, the positive impact of the rebound in the automotive and construction markets is greater than the negative impact of rising raw material costs.