Although the price of titanium dioxide and other raw materials continues to rise, the paint industry still faces considerable pressure for profitability, but due to the signs of a recovery in the North American construction industry and the strength of the industrial end markets (especially the automotive industry), the global paint manufacturers are facing the business. The growing confidence is getting stronger. In the first quarter of this year, the performance of paint manufacturers generally reported good news. The results of the first quarter results announced by the two largest paint giants PPG Industries and Sherwin-Williams revealed that the results were better than expected. Among them, PPG Industrial's net sales revenue increased by 6% year-on-year to US$3.8 billion, and adjusted net profit reached US$279 million. Its per-share performance reached US$1.81, which was much higher than the analysts’ previous estimate of US$1.44 per share. Charles E. Bunch, president of PPG Industries, said: "Despite the economic situation is still worrisome and the pressure of raw material inflation is high, corporate earnings continued to grow in the first quarter of this year, and earnings per share rose by nearly 30% year-on-year. The company is in the United States. The architectural coatings business was positively affected by the recovery of the US construction industry and the warm winter weather.†Xuanwei's consolidated net sales in the first quarter increased by 15.1% year-on-year to US$2.14 billion. In the first quarter, the diluted earnings per share of the company was 95 cents, compared with 63 cents a share in the same period of last year. The industry believes that for paint manufacturers, this year's good start has been confirmed, but the architectural coatings business has not been out of the woods. Ricky Alexander, executive vice president of PPG Industries, pointed out that from 2006 to 2011, the company's industrial architectural paint sales fell by 20% to 30%. With the largest declines in mature markets such as North America and Europe, the company shifted its business focus to emerging markets and expanded its operations in Brazil, China, Eastern Europe and Africa. The weak market demand has also forced the company to take active measures to reduce costs. PPG recently announced that it will restructure the construction coatings business and lay off 2,000 people. Dan Mollard, president of ChemQuest, a world-renowned paint, adhesives and sealant consultancy, said: “Paint companies are actively taking measures to reduce costs and have already produced results.†The predicament of rising raw material costs faced by paint manufacturers mainly comes from the continuous rise in the price of titanium dioxide. In order to ease the pressure, paint manufacturers are seeking to reduce the amount of titanium dioxide through new technologies and formulations. Douglas Nova, Vice President of Coatings Business at The Dow Chemical Company, said the company is currently working on a new polymer technology to increase the diffusion of titanium dioxide in coatings. Alexander said that the goal of PPG Industries is to reduce the use of titanium dioxide by 4% to 6% in the short to medium term. Sherwin’s CEO Christopher Connor stated that the company is trying to partially replace titanium dioxide with the use of titanium sulfate, new formulations and new technologies. The goal is to reduce the amount of titanium dioxide by 5% to 10%. In addition, there are also coating companies that have managed to sign some long-term supply contracts for titanium dioxide for hedging. AkzoNobel and PPG Industries have announced plans to establish partnerships with new entrants to the titanium dioxide market. At the same time, the price of petrochemical raw materials such as propylene is also rising, but the increase is limited. Morad believes that although the price increase of propylene is smaller than that of titanium dioxide, it will continue because the lighter weight of cracked raw materials in North America and the Middle East will reduce the production of propylene. Although the cost of raw materials continues to rise, it is analyzed that paint manufacturers are often able to increase product prices to make up for losses. The construction market in the United States began to recover from the bottom, while paint manufacturers are also actively expanding other markets. Douglas Nova, Vice President of Dow Chemical Coatings, stated that in emerging markets, the rapid economic development is stimulating the rapid increase in demand for coatings. Alexander said that the demand for end markets, such as food and beverage packaging, is relatively stable, because these consumer goods markets are relatively independent of the economic cycle. In addition, aerospace coatings business performance is also relatively strong. The automotive industry as a major paint terminal market is also rapidly recovering. Guilermo Nova holds the same view. He said that Dow Chemical's automotive coatings business began to take a turn for the better because of the recovery of the auto industry. According to the statistics of the "American Automobile News" data center, the total sales of US automobiles in March was 1.405 million, an increase of 12.7% compared with March 2011. In the first quarter of this year, the total sales volume was 3.467 million, an increase of 13.3% over the same period of last year. Morad pointed out that due to this, sales of automotive coatings in the United States are growing at a double-digit rate. For paint manufacturers, the positive impact of the rebound in the auto and construction markets is greater than the negative impact of rising raw material costs.
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