Coatings giant, PPG Industries PPG said that it has purchased certain assets of automotive refinish coatings maker, Futian Xinshi. Financial terms of the deal were not divulged.
Futian, which had sales of roughly $15 million last year, is a privately-owned company based in the Guangdong province of China. The entity distributes its products in China through a network of over 200 distributors and has a proven track record of growth by leveraging well-positioned brands, mature technology, low-cost operations and a strong distribution base.
Under the agreement, PPG Industries will buy Futian’s trademarks, product technology and customer list. The buyout will further boost PPG Industries’ foothold in the growing Chinese automotive refinish coatings market.
PPG Industries remains focused on growing its business through strategic acquisitions. The company, earlier this month, wrapped up its acquisition of leading Romanian paint and architectural coatings maker, Deutek S.A. from the Emerging Europe Accession Fund (“EEAF”). The buyout expands PPG Industries' foothold in Romania and also complements its positions in Poland, Czech Republic, Hungary and Slovakia.
PPG Industries’ shares gained 6.1% over the last three months while the Zacks categorized Chemicals-Diversified industry has gained 8.5% over the same period.
PPG Industries’ adjusted earnings of $1.19 per share for the fourth quarter of 2016 beat the Zacks Consensus Estimate by a penny. But net sales in the quarter fell 1.6% year over year to $3,497 million and missed the Zacks Consensus Estimate of $3,552 million. Unfavorable currency translation affected sales by 3%.
PPG Industries expects an improvement in global growth moving ahead, with improvement rates in developed regions gradually rising and continuing in emerging regions. The company has recently initiated a new restructuring program which is expected to generate $125 million in annual savings.
PPG Industries also aims to boost shareholder returns with cash deployment. The company expects to deploy $2.5–$3.5 billion of cash on acquisitions and share repurchases for 2017 and 2018 combined.
However, PPG Industries remains exposed to currency headwinds. Moreover, the company faces macroeconomic challenges and some of its end-markets including marine still remain sluggish.
PPG Industries currently carries a Zacks Rank #3 (Hold).
PPG Industries Inc. Price
PPG Industries Inc. Price | PPG Industries Inc. Quote
Other Stocks to Consider
Better-ranked companies in the chemical space include BASF SE BASFY, Methanex Corporation MEOH and Kronos Worldwide, Inc. KRO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BASF has an expected long-term growth of 7.7%.
Methanex has an expected long-term growth of 15%.
Kronos has an expected long-term growth of 5%.
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