PPG Industries Inc. reported fourth-quarter 2011 sales of $3.5 billion, a 4% increase from $3.4 billion in the fourth quarter of 2010, and turned in record-high quarterly earnings for the fourth straight quarter.
| Charles E. Bunch|
| PPG chairman and CEO|
For the year, sales rose 11%, hitting a total of $14.9 billion compared to $13.4 billion in 2010, as the company maximized its geographic and end-use market diversity, Chairman and CEO Charles E. Bunch said.
Fourth-quarter net income was $216 million, up from $205 million in the fourth quarter of 2010. For the year, net income was $1.1 billion, up sharply from $769 million in 2010.
“PPG achieved record earnings per share each quarter this year by focusing on strong execution in its global businesses, aggressive cost management and amplified cash deployment,” Bunch said. “In so doing, we delivered the best full year earnings per share in PPG’s history.
“This strong performance was achieved despite moderating global growth rates during the fourth quarter,” Bunch said. “During the year, we experienced uneven economic conditions, persistent raw-material inflation, and continued anemic construction activity in developed regions. However, the geographic and end-use market diversity of our business portfolio continued to be an important benefit in 2011.”
U.S. architectural-coatings sales improved in the fourth quarter, but sales growth in developing economies tailed off, the company said.
Overall, Bunch said fourth-quarter volumes were flat compared to the prior-year period, as some customers curtailed inventory and remained cautious with ordering patterns in light of economic uncertainty. The effect was most evident in Europe, where overall sales volumes fell by 1%, and in PPG’s Commodity Chemicals segment.
But the company experienced strengthening global demand during the fourth quarter in several end-use markets, including aerospace, automotive manufacturing and several general industrial markets, Bunch said, adding that market-share gains also contributed to stronger sales for the quarter.
“During the quarter, we continued to aggressively pursue price increases and made further progress in countering high raw material cost inflation,” Bunch said. “Although prices of many raw materials have stabilized, we plan to implement additional price increases in 2012 to offset the inflation we have already absorbed.”
PPG repurchased 2.7 million shares of stock in the fourth quarter and more than 10 million shares during the full year, and ended the year with approximately $1.5 billion in cash and short-term investments.
Architectural Coatings Sales Strengthen in U.S.,
with Weaker Growth Reported in ‘Emerging Regions’
For the company’s Performance Coatings segment, fourth-quarter sales were $1.1 billion, up $34 million from the fourth quarter of 2010. Segment earnings declined $30 million, to $140 million, due primarily to weaker results for marine and architectural coatings and cost inflation.
For the year, Performance Coatings segment sales were $1.14 billion, up from $1.1 billion in 2010. Segment earnings for the year were $673 million compared to $661 million in 2010.
The company said U.S. architectural-coatings sales improved during the quarter, with same-store sales growth at company-owned stores in the “high single-digit percentages” due to higher pricing, although volumes remained flat. Architectural coatings volumes in “emerging regions” declined by mid- to high-single-digit percentages, with weaker demand experienced in China.
For the Industrial Coatings segment, fourth-quarter sales were $1 billion, a 7% increase from $949 million in the fourth quarter of 2010. Segment earnings for the quarter were $106 million, up sharply from $79 million in the prior-year period.
For the year, Industrial Coatings segment sales were $4.16 billion, up from $3.7 billion in 2010. Segment earnings were $438 million, a solid increase from $378 million the year before.
For the Architectural Coatings—EMEA (Europe, Middle East and Africa) segment, fourth-quarter sales were $449 million, a 5% increase from $426 million in the fourth quarter of 2010. Segment earnings for the quarter were $8 million, compared to $2 million in the prior-year period.
For the year, Architectural Coatings—EMEA sales were $2.1 billion, up from $1.87 billion in 2010. Segment earnings were $123 million compared to $113 million in 2010.
Outlook: ‘Uneven’ Trend Expected to Persist
Bunch said he anticipates first-quarter 2012 growth to remain “uneven by region and varied by industry, consistent with fourth quarter 2011.”
“We expect the European region to remain the most challenging,” he said. “We expect moderate strengthening in the U.S. economic recovery, supported by an enhanced global cost position in the industrial sector due to lower regional natural gas prices.“
Emerging-region growth rates are expected to remain high compared to developed regions,”but more moderate and erratic than they have been in the past,” he said.