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Rockwood Announces Price Increase

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Specialty chemicals and advanced materials company, Rockwood Holdings, Inc. (ROC), recently announced that it is increasing the price of its synthetic iron oxide pigment products globally. These pigment products, sold through the company’s Color Pigments & Services division, are used in construction, coatings, plastics and specialty applications.

Rockwood has decided to impose a $120 per metric ton price rise, effective August 1, applicable to all synthetic iron oxide pigment products. The company’s sales teams will individually discuss the price increment with customers.

The increase in the price is expected to generate more revenues for Rockwood. This should aid the company’s infrastructure upgrade programs, as well as deal with regulatory requirements in some regions. Further, it would also support the research and development activities taken up by the company.

Rockwood’s Color Pigments & Services Division is one of the largest suppliers of colored pigments in the world. It has facilities across the U.S., UK, France, Italy, Germany, Australia and China, along with sales offices in Singapore and Hong Kong. Hence, the global increase in prices will affect a large number of customers, and may increase the company’s top line in the process.

Rockwood’s recent initiatives require the company to generate better cash flow, and the price hike is a step in that direction. The company initiated a dividend program last month, under which it will be paying a forward annualized dividend of $1.40 to shareholders. Furthermore, the company has agreed to purchase the titanium dioxide production assets and inventory of crenox GmbH through its joint venture with Kemira Oyj, a move which is expected to further strengthen its titanium dioxide pigments business.

Rockwood, which competes with PolyOne Corporation (POL), currently holds a Zacks #3 Rank, reflecting a short-term (1 to 3 months) Hold rating.

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