Zacks Industry Outlook Highlights: Eastman Chemical, Celanese, PPG Industries
CHICAGO, Dec. 21, 2012
CHICAGO, Dec. 21, 2012 /PRNewswire/ --Today, Zacks Equity Research discusses
the U.S. Chemicals, including Eastman Chemical Company (NYSE:EMN), Celanese
Corp. (NYSE:CE), PPG Industries Inc. (NYSE:PPG) and Methanex Corp.
A synopsis of today's Industry Outlook is presented below. The full article
can be read at
According to the ACC, emerging market growth and abundant shale gas should
help drive U.S. chemical exports. A string of factors are driving growth in
the export markets including favorable energy costs stemming from the
abundance of shale gas and strong demand from the emerging markets. Affordable
natural gas and ethane (derived from shale gas) offer U.S. producers a
compelling cost advantage over their global counterparts who use a more
expensive, oil-based feedstock.
Further, cost-cutting measures implemented by chemical companies including
plant closures and headcount reduction, should yield industry-wide margin
improvements. Cash flows derived through these actions can be used for growth.
Mergers and acquisitions offer chemical companies another means to shore up
growth in this difficult scenario. These companies remain focused on exploring
growth opportunities in the fast-growing emerging markets, particularly in the
lucrative regions of Asia-Pacific and Latin America such as China and Brazil.
We feel that chemical companies with strong earnings quality, healthy growth
trajectory and liquidity profiles are better placed in the current rickety
market environment considering their ability to leverage strong balance sheet
and cash flows in maximizing shareholder value in form of dividends and share
repurchases or use them for value acquisitions.
We have a bullish view on Eastman Chemical Company (NYSE:EMN), which is
delivering forecast-topping earnings and is well placed to benefit from its
Solutia acquisition. The company's diversified chemical portfolio and
integrated and diverse downstream businesses represents the pillars of
strength. It also benefits from business restructuring, cost-cutting measures
and increased capacity additions.
We are also optimistic about
) despite the challenges it faces in Europe. We like the company's initiatives
to improve margins and profits by running its plants better and controlling
expenses. The company's strong presence in emerging markets, especially in
China, will enable it to deliver incremental earnings in 2012. We are also
upbeat about the prospect of its TCX ethanol process technology.
In specialty chemical space, PPG Industries Inc. (NYSE:PPG) represents an
attractive play. The company witnessed strong growth in its North American
automotive OEM coatings business in the September quarter, enabling it to
deliver better-than-expected earnings. It has a diversified base of products
and markets, and looks to grow its businesses strategically along with
We also hold a favorable view on specialty chemical company
). The company has taken up a number of steps, including production ramp ups
in New Zealand and the Medicine Hat unit, to boost capacity. We are upbeat
about its Louisiana project, which is expected to create significant value for
its shareholders and meaningfully contribute in cash generation.
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