By Jeff Sanford
Toronto, Ontario -- February 13, 2018 -- In this week's Tuesday Ticker, AkzoNobel announces preliminary, unedited financial results for the full-year of 2017; investing site posts analysis of major global paint maker Sherwin-Williams and much, much more!
Investors have been reacquainted this past week with that old bugbear, stock market volatility. The easy, breezy days of 2017 and early 2018 - when markets went in one direction: up - have faded. Investors are again dealing with the fact that markets can also go down. The sell-offs have been big in terms of points. But it’s also the case that the sell-offs have not been as big as those in 2008 or back in 2000 when the dot-com bubble burst. Percentage-wise the declines have been comparable to August 2011 when markets reset after overshooting underlying fundamentals.
This is arguably the case again. Many have expected some kind of retrenchment as recent gains seemed to be too good (and rapid) to be true. With rates rising on bonds there is an attractive alternative to risky equities and so the declines may be getting markets back to where they should be. From the perspective of one common market valuation, the Price-Earnings ratio, market values would have to decline a bit more from here to get back in line with long-term trends. So there could be further sell-offs yet. Of course, the meltdown has an upside. If the declines push off further interest rate hikes by the U.S. Federal Reserve that would be good for equity markets. But make no mistake: The volatility that typically defines stock markets has returned.
Axalta Coating Systems has “worked diligently behind the scenes to provide coatings that are designed to protect and beautify ski equipment at the international multi-sport event in Pyeongchang County, South Korea,” according to a press release. The company’s coating materials are often used on skis and they are being used again at this year’s winter Olympics in Korea. Some of the products used: “Axalta’s Stollpox, Aquapox, Cellonit and Aquacryl Special Primer, Printing Paint and Clearcoats in solventborne and waterborne formulations.” Axalta’s president of industrial coatings, Michael Cash, was quoted as saying, “Axalta has a long track record of painting winners, from race cars and football teams, to champion skiers. Like these incredible athletes, our goal is to embrace challenges that test our abilities… We’re truly grateful to see our paint tested at such inspirational, global events.”
Dutch paintmaker AkzoNobel announced preliminary, unedited financial results for the full-year of 2017. According to the company, the internal separation of the Specialty Chemicals business is complete. A full separation of Specialty Chemicals, either via a private sale or a legal de-merger, remains on track for April 2018. As a result the Specialty Chemicals business will be reported as discontinued operations, according to a news release. According to the company, revenue, including discontinued operations, for full-year 2017 is expected to be up 3 percent—at around €14,575 million. According to the release, “Some industry specific headwinds persisted, including higher raw material costs, and adverse effects from foreign currency increased further.”
A consortium led by U.S. private equity firm Apollo is said to be on the hunt to buy the chemicals division of Akzo. Apollo is being smart in its pursuit of the Akzo chemical business. The fund has teamed up with Dutch pension firm PGGM, which oversees USD $245 billion on behalf of workers in the Dutch healthcare sector. By having a big Dutch national fund on its team the fund can avoid some of the issues that disrupted the attempted takeover of the company this past summer.
Akzo has set an April deadline to sell or spin off the chemicals operations. According to the story, “Akzo’s decision to sell the unit was made as part of its strategy to reject a 26 billion euro takeover bid from U.S. rival PPG Industries. Akzo rejected the idea of an American owner, saying PPG would be a poor cultural fit and the takeover would lead to “job losses.”
An investing site posted an analysis of major global paint maker Sherwin-Williams. The company recently bought up Valspar. According to the stock analyst the company now has an, “... extremely robust presence in the American and Canadian markets. With approximately 4,268 stores in North America, Sherwin-Williams has extensive coverage across the market. The Valspar brands are also partnered with Lowe's Companies, giving additional domestic exposure.” The story goes on to note that Valspar has diversified itself both in product mix and geography. One of the most notable benefits of the Valspar acquisition is the added presence in the Asia and Pacific markets, where demand for paints and coatings have the highest growth rates…” Margins should improve as Sherwin-Williams absorbs Valspar into its operations. “Despite this robust growth, management is going to be diverting its cash flows to ‘reset’ the company financially after the Valspar deal,” according to the analyst. But once adjustments are made, the company will begin to harvest the benefits of the deal as overhead costs at Valspar are reduced.
3M, a global automotive collision repair and auto care solutions provider, announced it expects to enjoy solid new business in the years to come with the introduction of electric cars. According to 3M CEO Inge Thulin, “We can capitalize on what we know in traffic safety, which is a very strong position for us not only in vertical signage, but in license plates and pavement marking. That is where you need to regulate things going forward... As I look upon the future, that's a market that will explode for 3M. That's around U.S. $6 billion addressable market with a growth rate of 8 to 10 percent, and we are now growing that business around 15 to 20 percent if you combine the three elements." The CEO was appearing on Jim Cramer’s popular Mad Money show.
The Quebec-based paint distributor will hold a conference call between management and financial analysts to discuss its 2017 fourth quarter results. The conference call occurs Tuesday, February 20, 2018 at 8:00 AM Eastern.
Analysts expect AutoCanada to report earnings per share of U.S $0.37 on March 15. Analysts anticipate a gain of U.S $0.09 per share, an increase of 32 percent over last quarter, which earnings were U.S $0.28 per share.