Corning in Long-Term Diesel Deals - Analyst Blog
05 Gennaio 2012 - 3:15PM
Zacks
Corning Inc. (GLW) has entered into long-term
supply agreements with heavy-duty diesel engine, truck,
construction and agricultural equipment manufacturers. The terms of
these agreements were not disclosed, including the number of
companies involved. However, the company specified that the
agreements involved core customers and will ensure those
manufacturers have access to Corning products in the coming
years.
Corning is a leading global supplier of cellular ceramic
substrates and diesel particulate filters. Its filters remove
almost 95% of harmful gases and particulates from diesel emissions.
The demand for Corning’s heavy-duty diesel products is expected to
grow three folds over the next five years due to the raising of
environmental safety standards all over the world.
Hence, in order to take care of the capacity constraints and
support its key customers, Corning signed agreements, reserving a
substantial portion of its current and future diesel capacity to
ensure a steady supply to its core customers.
Several nations, including China, India and those in the
European Union are expected to tighten their emission regulations,
creating additional demand for Corning products. So, in order to
cater to the increasing demand, Corning plans to construct a second
heavy-duty diesel facility and support the projected market needs.
The location for the facility will be announced in the first
quarter of 2012. Corning’s primary facility is located in Erwin,
where 600 new employees were recently hired to meet the requirement
for emission control products.
Corning's Environmental Technologies segment supplies a range of
advanced cellular ceramic substrates and particulate filters to
manufacturers of gasoline and diesel engines and vehicles. In the
third quarter, the segment’s sales were $247 million, down 4.3%
sequentially. Corning expects this segment to reach approximately
$1 billion in sales this year and grow to roughly $1.4 billion by
2014.
However, for hardware and equipment products, Corning faces
significant competition from 3M Company (MMM),
Tyco Electronics, Ltd. (TEL), Furukawa OFS,
CommScope and ADC Communications. Also, in November, Corning
slashed its fourth quarter Gorilla Glass outlook to a sequential
decline of 25% from a decline of 15%, indicating lower global
demand for cover glass used in tablet computers and LCD TVs.
This justifies the Zacks #5 Rank, which implies a Strong Sell
rating on a short-term basis.
CORNING INC (GLW): Free Stock Analysis Report
3M CO (MMM): Free Stock Analysis Report
TE CONNECT-LTD (TEL): Free Stock Analysis Report
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