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PPG Industries & Lomon Billions Expand TiO2 Supply Deal

PPG Industries, Inc. PPG and Lomon Billions entered into an expanded multi-year titanium-dioxide (TiO2) supply deal. TiO2 is a key raw material used by PPG Industries. Per the deal, Lomon Billions will supply additional chloride and sulfate-based TiO2 to PPG Industries from its current manufacturing capacity.

Lomon Billions, one of the world’s leading TiO2 suppliers, is constructing new manufacturing capacity. Notably, PPG Industries has committed to purchase additional supplies of chloride-based TiO2 from new manufacturing capacity which is expected to be onstream in 2019. However, the commercial terms of the agreement have been kept under wraps.
The expanded agreement reflects PPG Industries’ confidence in the growing capability of Lomon Billions and its commitment toward continuous investments in additional TiO2 manufacturing capacity.
PPG Industries has outperformed the industry in the past year. The company’s shares have lost around 9.6% compared with roughly 20.4% decline of the industry.

In its third-quarter earnings call, PPG Industries stated that it sees 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 during the third quarter and expects this to persist in the fourth quarter. The company projects fourth-quarter earnings per share in the range 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. The company’s 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

PPG Industries, Inc. Price and Consensus | PPG Industries, Inc. Quote

Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the basic materials space include CF Industries Holdings, Inc CF, Methanex Corporation MEOH and The Mosaic Company MOS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have risen 17.2% in the past year.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have gained 6.6% in a year’s time.

Mosaic has an expected long-term earnings growth rate of 7%. The company’s shares have rallied 43.8% in the past year.

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