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PPG Industries (PPG) to Boost Beverage Can Coatings Capacity

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PPG Industries, Inc. (PPG - Free Report) has announced that it is presently expanding the production capacity of its over-varnish coatings for beverage can exteriors, including PPG Isense Gloss coatings, at its facility in Delaware, OH.

The addition of the new volume to the existing capacity at its Oak Creek, WI, packaging coatings facility is expected to enhance the company’s overall production of over-varnish coatings in the United States by 40%. Besides boosting supply-chain security, the Delaware plant will provide in-line analytics for improved batch consistency.

PPG said that the added capacity will enable it to better aid beverage can manufacturers to cater to the surging demand for their products and bring in more security to their supply chain for beverage can coatings. Increased investments in ramping up production will also ensure that can makers can rely on localized sources of the PPG coatings.

Shares of PPG have grown 49.6% over a year, outperforming the industry’s 29.3% rise.

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In the recently reported second quarter, the company recorded adjusted earnings of $1.94 per share, missing the Zacks Consensus Estimate of $2.19. Its net sales of $4,359 million, increasing 44.6% from the year-ago quarter, also missed the Zacks Consensus Estimate of $4,418.2 million.

The company expects higher aggregate input and logistics costs in the third quarter compared with the second quarter. It will continue to prioritize further selling price increases, which is expected to fully offset raw-material cost inflation before the end of 2021, on a run-rate basis.

The overall economic demand growth is projected to remain broad and strong. The company also anticipates strong sales growth later this year and in 2022 aided by its technology-advantaged products, its diverse geographic and end-use market participation as well as continuing recovery from its aerospace business.

Moreover, PPG expects structural cost savings from restructuring actions of roughly $30 million year over year in the third quarter. Corporate expenses are expected to increase to $60 million in the third quarter from $52 million in the second quarter. Net interest expenses are expected to range between $28 million and $30 million.

Zacks Rank & Stocks to Consider

Currently, PPG Industries carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the basic materials space include Orion Engineered Carbons S.A (OEC - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report) and Cabot Corporation (CBT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Orion has a projected earnings growth rate of 79.8% for the current year. The company’s shares have grown 64.3% over a year.

LyondellBasell has a projected earnings growth rate of 222.6% for the current year. The company’s shares have risen 41.2% over a year.

Cabot has a projected earnings growth rate of 137.5% for the current year. The company’s shares have rallied 39.7% over a year.

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