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PPG Industries (PPG) Signs Agreement to Acquire Hemmelrath


PPG Industries, Inc. PPG has reached a definitive agreement to buy Germany-based automotive coatings manufacturer, Hemmelrath. The deal is expected to close in the first half of 2019, subject to customary closing conditions. However, the financial terms of the agreement have been kept under wraps.

Hemmelrath is a coating solutions provider to automotive original equipment manufacturers (OEMs). The company supplies automotive plants worldwide, and more than 7 million vehicles are coated with its products annually. The company operates several manufacturing facilities across the globe located in Duncan, SC, United States, Klingenberg and Erlenbach, Germany; Indaiatuba, Brazil; and Jilin, China.

Per the company, the acquisition will expand its range of automotive coating products, and add manufacturing and formulating solutions as well as provide value to customers and shareholders.

PPG Industries has outperformed the industry in the past year. The company’s shares have lost around 15.2% compared with the 27.6% decline of the industry.

In its third-quarter earnings call, PPG Industries stated that it expects normal business seasonality in the fourth quarter. It also expects overall global economic growth to remain positive. The company witnessed higher industrial production volatility and inconsistency in emerging region growth rates in the third quarter and expects this to persist in the fourth quarter. The company projects fourth-quarter earnings per share of $1.03-$1.13.

PPG Industries’ Performance Coatings segment sales rose more than 2% at constant currency in the third quarter as higher selling prices more than offset the modest decline in sales volumes. Meanwhile, its Industrial Coatings segment saw a year-over-year uptick in sales. However, net income at both the segments declined year over year due to raw material and logistics cost inflation.

PPG Industries, Inc. Price and Consensus

Zacks Rank & Stocks to Consider

PPG Industries currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are Ingevity Corporation NGVT, CF Industries Holdings, Inc. CF and Cameco Corporation CCJ.

Ingevity has an expected earnings growth rate of 21.5% for 2019 and a Zacks Rank #1 (Strong Buy). The company’s shares have gained 13.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries has an expected earnings growth rate of 70.5% for 2019 and a Zacks Rank #2 (Buy). The stock has gained 3.8% in a year.

Cameco has an expected earnings growth rate of 20% for 2019 and a Zacks Rank of 2. Its shares have gained 25.1% in a year’s time.

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