US PPG Q2 profit catches up after weak start from Japan quake - CEO

22 July 2011 00:28  [Source: ICIS news]

HOUSTON (ICIS)--US coatings, chemical and glass producer PPG's second-quarter profit surged 35% to $340m (€238m) from the same quarter last year despite some “uncommon events”, the company’s CEO said on Thursday.

“Looking ahead, we anticipate the global economic recovery will continue, although at its uneven pace,” said PPG chairman and CEO Charles Bunch.

Second-quarter sales were $4bn, up by 15% from the same quarter in 2010, the company said.

During the second-quarter earnings conference call, Bunch attributed the strong performance to higher pricing in all sectors and cost management.

April was considered the weakest month of the quarter, partly because of the Japanese earthquake and tsunami in March that disrupted auto parts supply; adverse weather that slowed down architectural coatings sales, and planned and unplanned maintenance shutdowns.

PPG's second-quarter net profit was $340m, a surge of 35% year on year.

Architectural coatings sales were $611m, up by $111m from the same time last year.

On 19 April, PPG enacted a force majeure on its North American liquid caustic soda supply because of mechanical problems. The force majeure was lifted on 4 May.

Raw material prices are expected to flatten during the second half of the year, particularly for propylene and some resins, Bunch said.

“That will help us recapture some of the margin we’ve lost in our supply chain value,” he said.

PPG said it was poised for mergers and acquisitions in the second half of the year, particularly in emerging regions such as the Middle East, Africa and Latin America, although any acquisitions were not likely to affect the company’s chlor-alkali business.

In May, PPG completed a $27m deal to acquire Equa-Chlor’s 220 tonne/day chlorine plant and other assets of the Longview, Washington, company.

PPG company officials described caustic inventories as “very low”. The company said its inventories have dropped to the lowest levels in the past six months.

PPG also said it expected seasonally lower caustic production and lower chlorine-related exports, which would further temper caustic output.

The company's largest caustic soda unit will be down for a two-week maintenance period during the third quarter at PPG’s plant at Lake Charles, Louisiana. 

Market sources said the turnaround was expected to take place in the latter half of July.

US caustic exports are at $410–450/dry metric tonne (dmt) FOB (free on board) US Gulf (USG), as assessed by ICIS.

Other major US caustic producers include Dow Chemical, Formosa Plastics, Shintech, Olin, Occidental Chemical and Westlake.

($1 = €0.70)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
For more on PPG’s plants visit ICIS plants and projects
For more on chlor alkalis visit ICIS chemical intelligence


By: Ruth Liao
+1 713 525 2637



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