PaintSquare.com


The First Word in Protective & Marine Coatings

A Product of Technology Publishing / PaintSquare
JPCL | PaintSquare News | Durability + Design | Paint BidTracker

Railcar Coating Systems: Selecting and Sourcing

Paint and Coatings Industry News

Main News Page


$4B Sale of DuPont Coatings Unit Seen

Tuesday, February 14, 2012

More items for Coating Materials

Comment | More

After a last-ditch “grace period” to turn around its performance, DuPont Chemical’s auto paint business is out of gas and up on the auction block, news reports say.

DuPont’s Performance Coatings segment is one of the world’s biggest makers of automotive paint, but also has the worst outlook in DuPont’s increasingly diversified portfolio. The unit sells its coatings to auto producers like Ford and General Motors as well as to Maaco and other auto refinishers.

‘We’ll Look at Alternatives’

DuPont Performance Coatings was formed in March 1999 by the merger of Herberts GmbH and DuPont Automotive Finishes.  The unit consists of includes DuPont Industrial Coatings, DuPont Aviation Finishes, DuPont Commercial Finishes, DuPont Refinish, Standox, Spies Hecker and Nason Finishes.

 DuPont's automotive paint portfolio has been one of its worst performers

 Photos: DuPont

The automotive paint portfolio has been one of DuPont’s lesser performers, compared to the successes of its agriculture, industrial biosciences, and nutrition and health segments.

The chemical giant will not comment on a possible sale, but CEO Ellen Kullman told reporters in December that the company’s Performance Coatings business would get a “chance” to see if it could meet its targets.

“From a performance standpoint, we’ll give them a chance to see if they can get there,” Kullman said. "If any of our businesses can’t obtain their targets, obviously we’ll look at alternatives, whatever that means.”

Reports of a likely sale have persisted for months. Now, reports say, DuPont is actually accepting bids for the business.

‘A Far Different Company’

A Performance Coatings sale would be another example of DuPont’s shift away from its traditional chemicals-based business.

“DuPont is a far different company than it was just a few years ago,” Kullman said at the company’s third-quarter earnings call last year. She noted that agriculture, food and nutrition products now accounted for a third of the business, up from 20 percent a few years ago.

 In 2010, DuPont opened a $30 million, 100,000-square-foot coatings laboratory in Delaware
In 2010, DuPont opened a $30 million, 100,000-square-foot coatings laboratory in Delaware staffed by more than 100 people for R&D on automotive, marine and aviation coatings.

DuPont’s Agriculture segment, for example, delivered a 30 percent increase in Pre-Tax Operating Income (PTOI) in 2011 over 2010. Meanwhile, the company’s foray into Industrial BioSciences, with the acquisition of Danisco, reaped first-year sales of $289 million and PTOI of $34 million in 2011.

And those units were dwarfed by Nutrition & Health, where PTOI skyrocketed from $62 million in 2010 to $170 million at the end of 2011—a stunning 174 percent increase.

Coatings Struggle

By contrast, Performance Coatings has been struggling. The business accounted for just 12% of DuPont’s $31.5 billion in revenue last year. Although fourth-quarter sales showed an overall 8 percent increase, those gains were built on 10 percent price increases imposed to offset rising raw material costs; segment volume declined by 2 percent over the same quarter of 2010.

Segment Pre-Tax Operating Income (PTOI) in the fourth quarter plummeted by 18 percent, to $58 million, compared to the prior-year period.

 DuPont’s Performance Coatings business includes one of the world’s largest automotive paint units as well as aviation, industrial and commercial finishes
DuPont’s Performance Coatings business includes one of the world’s largest automotive paint units as well as aviation, industrial and commercial finishes.

The company reported destocking and flat/lower builds in all regions except North America, where demand remained strong in the OEM motor vehicle and heavy-duty truck markets.

Performance Coatings sales for the full year of 2011 were $4.3 billion, squeezing out a 2 percent over the previous year. The segment’s PTOI increased by 5 percent over 2010. DuPont projects that the unit’s sales will rise by 3-5 percent a year in the long term, with profit margins expanding from 7 percent in 2011 to as much as 12 percent.

Sales Buzz

A sale of the Performance Coatings unit has been reported since the fall. Bloomberg News said DuPont has hired Credit Suisse to look for potential buyers and has hired Greenhill & Co. to separately handle a sale of a powder-coatings unit within the division.

Bloomberg said the sale may bring in $4 billion.

Potential buyers include competitors PPG Industries, BASF and Akzo Nobel, according to reports. Several buyout firms have also reportedly been preparing for the auction since late last year. Private equity firms find the unit especially attractive as they believe costs can easily be cut to make it more profitable, published reports say.

Private equity firms Blackstone Group, Clayton Dubilier & Rice and Advent International are all considering bids, sources told Reuters.

In addition, KKR & Co, Bain Capital, TPG Capital and Onex Corp have already made inquiries about the sale, Reuters reported in December.

Valspar Corp. will not be a bidder for the DuPont business, CEO Gary E. Hendrickson said. Despite Valspar’s strong first quarter, taking on the Performance Coatings unit  is “a little too big a bite for us,” Hendrickson told reporters in a conference call Tuesday.

 

   

Tagged categories: AkzoNobel; Automotive coatings; BASF; Business operations; Coating Business; DuPont; Economy; PPG

Comment Join the Conversation:

Sign in to our community to add your comments.

Polyval Coatings
Polyflex® Polyurea Linings

exhibit outstanding versatility in use; providing abrasion resistance, superior seamless waterproofing and high-chem corrosion protection. www.polyflexlinings.com


Sherwin-Williams

Sherwin-Williams
Our 3,500 locations give you a level of service that is simply unmatched.


Mitsubishi Gas Chemical America
Performance Amine 1,3-BAC

A highly reactive cycloaliphatic diamine offering superior performance. Reasonable cost and curing efficacy makes it suitable for all types of epoxy resin applications.


Wasser High-Tech Coatings Inc.
Wasser Coatings Protect

some of the most important bridges in the country; learn about our NEPCOAT-approved system and our entire range of MCU & Polyurea coatings. 1-800-627-2968 www.wassercoatings.com


International Paint LLC

Maximize Coating Productivity

  • Rapid cure
  • Ease of application
  • Time savings
  • Improved handling times
  • Reduces number of coats
  • Low VOC emissions
  • Color retention
  • UV resistance


    BASF
    New resins from BASF will have metals loving water:

    Excellent corrosion resistance, low VOC, high gloss, thin films basf.us/industrialcoatings
    polyorders@basf.com
    800-231-7868


    Minerals Research & Recovery
    PREMIUM SLAG ABRASIVES

    Visit mrrinc.com. Companies specializing in abandonment and decommissioning projects have discovered that Sharpshot® 20X50 copper slag is an ideal product for subsea waterjet cutting.
    Call Steve: 520-297-4626

  •  
     
     
    Technology Publishing

    The Technology Publishing Network

    The Journal of Protective Coatings & Linings (JPCL) PaintSquare
    Durability + Design Paint BidTracker JPCL Europe

     
    EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
    REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
    MORE:      About PaintSquare.com   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us
     

    © Copyright 2000-2014, Technology Publishing / PaintSquare, All rights reserved
    2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951; Tel 1-412-431-8300; Fax 1-412-431-5428; E-mail webmaster@paintsquare.com