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PPG Invests $2.7M to Boost Powder Coating Capacity in Brazil

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PPG Industries Inc. (PPG - Free Report) has recently invested $2.7 million to bolster its powder coatings manufacturing capabilities at its facility in Sumaré in the Brazilian state of Sao Paulo. The project, to commence in the third quarter of 2022, is expected to increase the plant’s production capacity for powder coatings by nearly 40%.

The expansion initiatives will include purchasing new equipment that will facilitate PPG’s distribution of powder coatings. It is a highly sustainable product offering that comes with superior durability, transfer efficiency and the ability to be reclaimed or reused during application. PPG targets to not only achieve 40% of its sales from sustainable products by 2025, but also to increase its production capacity to cater to the surging customer demand in Brazil and other South American countries. The Sao Paulo plant caters to the home appliance, agriculture, transportation and general finishing industries, encompassing steel furniture, storage structures, gym equipment, electrical panels and power transformers.

In recent times, there has been a sharp spike in demand for powder coatings owing to their sustainability benefits and excellent performance properties. Powder coatings do not release solvents and are fully reusable, making them  an excellent component to reduce environmental footprint. In its dedicated efforts toward sustainability, PPG is making heavy investments in this product globally.

PPG’s shares have gained 16.7% over the past year compared with the industry’s 13.5% rise. The company’s estimated earnings growth rate for the current year is pegged at 18%.

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PPG, on its third-quarter earnings call, said that it expects ongoing supply chain disruptions to continue throughout the fourth quarter, with potential additional impacts from the recent industrial production curtailments in China. It forecasts these disruptions to ease modestly in overall quantity and magnitude as the quarter progresses.

It will continue to prioritize further selling price increases and expects price realization tooffset raw material cost inflation in early 2022.

Moreover, the recovery in the automotive original equipment manufacturer, aerospace and automotive refinish coatings businesses will be a key catalyst in 2022. It will continue to aggressively manage all aspects of its cost structure, the company noted.

PPG also expects net sales volumes to be down 8-10% year over year in the fourth quarter. The company sees adjusted earnings for the full year to be $6.67-$6.73 per share.

Zacks Rank & Key Picks

PPG currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks from the basic materials space include Univar Solutions Inc. (UNVR - Free Report) , The Chemours Company (CC - Free Report) and AdvanSix Inc. (ASIX - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Univar has an expected earnings growth rate of 55.2% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised 9% upward over the past 60 days.

Univar beat the Zacks Consensus Estimate for earnings in the four trailing quarters, with the earnings surprise being 24.1%, on average. UNVR’s shares have rallied 43.8% over a year.

Chemours has an expected earnings growth rate of 105.1% for the current year. The Zacks Consensus Estimate for CC’s earnings for the current year has been revised 10% upward in the past 60 days.

Chemours beat the Zacks Consensus Estimate for earnings in the last four quarters. The company delivered a trailing four-quarter earnings surprise of roughly 34.2%, on average. CC has gained 22.8%over a year.

AdvanSix has an expected earnings growth rate of 197% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised 14.1% upward over the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in the four trailing quarters, with the earnings surprise being 47%, on average. ASIX’s shares have also surged 127.6% over a year.


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