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Deal Fuels PPG’s Record Year

Friday, January 16, 2015

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PPG Industries' year-end acquisition of Mexico's Comex helped deliver record net sales and earnings to the Pittsburgh, PA paint and coatings maker.

The company reached net sales of $15.4 billion for 2014, according to its Q4 and full-year results announced Thursday (Jan. 15).

"We established new fourth quarter and full year milestones in sales and adjusted earnings per share from continuing operations," said Charles E. Bunch, PPG chairman and CEO.

PPG 2014
Photos: PPG Industries

PPG Industries said it had "another successful and eventful year," posting full-year sales and yearly and quarterly gains in each segment.

"While overall global economic activity remained modest, our sales volume improved about 4 percent, with each major region delivering volume growth at or above third quarter results. This was aided by solid growth in each business in our Industrial Coatings segment, along with continuing sales improvement in aerospace and automotive refinish."

Highlights

PPG said some of the highlights from "another successful and eventful year" included:

  • Record full-year net sales of $15.4 billion, up 8 percent year-over-year;
  • Full-year net income of $1.13 billion ($1.36 billion adjusted), versus $950 million ($1.11 billion adjusted) in 2013; and
  • Record full-year adjusted earnings per diluted share from continuing operations of $9.75, up 27 percent year-over-year.

Highlights from the fourth quarter included:

  • Net income of $86 million (62 cents per diluted share);
  • Net sales growth of 6 percent year-over-year;
  • Q4 net sales of $3.71 billion, up 6 percent over the same period in 2013;
  • Record Q4 adjusted earnings per diluted share from continuing operations of $2.11, up 26 percent year-over-year; and
  • Quarterly sales volumes up 4 percent as growth rates in each major region matched or exceeded Q3.

"Our strong financial performance, including several consecutive years of at least 20 percent adjusted earnings growth, clearly illustrates the benefits of our active portfolio management, earnings-accretive cash deployment and persistent operational focus," Bunch said.

U.S., Canada Lead Industrial Gains

Industrial Coatings segment net sales for Q4 saw a slight year-over-year increase of 1 percent, or $15 million, reaching $1.34 billion. Full-year sales increased from $5.3 billion in 2013 to $5.6 billion in 2014.

Charles E. Bunch PPG financial results

Chairman and CEO Charles E. Bunch said the company remains "poised to benefit from continued global growth due to our broad geographic reach and excellent product portfolio, coupled with our previously completed restructuring actions and ongoing cost discipline."

Total segment earnings for the quarter were $223 million, up $21 million, or 10 percent, year-over-year as a result of higher sales and manufacturing cost improvements. Yearly earnings grew to $951 million, from $824 million the prior year.

A 5 percent gain in Q4 sales volume growth was partially offset by an unfavorable currency translation of 4 percent.

The industrial and specialty coatings and materials businesses delivered high sales volumes across all major regions in the fourth quarter, led by volume growth in the U.S. and Canada.

Packaging coatings sales volumes also grew in Q4, including higher European results.

Automotive OEM coatings delivered higher sales volumes across all regions in the fourth quarter, growing in aggregate by mid- to high-single-digit percentages, which exceeded the global industry growth rate of about 2 percent, according to the company.

Comex Aides Performance Coatings

The Performance Coatings segment for the fourth quarter saw a 10 percent increase over the year before, reaching $2.1 billion. The growth was primarily due to acquisition-related gains, including about $175 million of sales from the Comex acquisition, which closed in early November.

For the entire year, sales jumped to $8.7 billion, up from $7.9 billion in 2013.

The division comprises Protective and Marine's six brands, the Aerospace portfolio, the 24 brands of Architectural Coatings (Americas and Asia/Pacific), and more than 20 brands in the Automotive Refinish business.

Segment earnings of $239 million were up $37 million, or 18 percent, in Q4 because of the increase in sales volumes and acquisition-related earnings. Full-year income also grew to $1.2 billion, up from $1 billion in 2013.

PPG architectural coatings

Growth in the Performance Coatings segment was attributed to the acquisition of Comex in November.

Quarterly growth continued in aerospace and automotive refinish, reflecting increased end-use market demand.

North American architectural coatings sales grew by low- to mid-single-digit percentages in the fourth quarter. EMEA Q4 sales volumes were down 2 percent, and demand in the region remained mixed by country, with certain countries improving while others lagged, PPG said.

Aggregate protective and marine coatings sales also improved in Q4, aided by growth in Asia.

Glass Growth

The Glass segment had a 3 percent net sales increase in the fourth quarter, totaling $272 million. Sales for the year slightly increased, from $1.07 billion in 2013 to $1.1 billion in 2014.

Solid flat glass sales volume growth continued, but these gains were offset by lower fiber glass volumes, PPG said.

Segment earnings in Q4 were $33 million, up $11 million year-over-year. Yearly income was $81 million, up from $56 million in 2013.

Looking Forward

"As evidenced by our results, we remain poised to benefit from continued global growth due to our broad geographic reach and excellent product portfolio, coupled with our previously completed restructuring actions and ongoing cost discipline," Bunch said.

PPG Industrial Coatings

Solid growth in each Industrial Coatings business helped the company improve sales volume in each major region.

According to Bunch, the company anticipates mixed growth rates by region in 2015, with North American and Asian economies continuing to grow at rates generally consistent with 2014. European growth is expected to be "subdued" overall, with mixed growth by country.

However, Bunch said, European economies could benefit "considerably" if oil prices remain at their current levels, possibly stimulating growth.

The company anticipates deploying $1.5 billion and $2.5 billion of cash in years 2015 and 2016 combined, on acquisitions and share repurchases.

"From a PPG persepctive, we remain focused on new product development, operational excellence and continued opportunities to deploy cash for earnings accretion. Our acquisition pipeline remains active, and share repurchases remain an integral element of our capital allocation strategies," Bunch said.

   

Tagged categories: Architectural coatings; Business matters; Earnings reports; Economy; Finance; Glass; Marine Coatings; Market trends; PPG

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