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PPG Releases Q4, Year-End Financials

Friday, January 19, 2018

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Global coatings manufacturer PPG (Pittsburgh) announced its fourth-quarter earnings report Thursday morning (Jan. 18), as well as its 2017 year-end report, boasting net sales increases in each.

For the quarter, the company reported net sales of approximately $3.7 billion, up about 8 percent over the prior year. Full-year 2017 reported net sales from continuing operations totaled $14.8 billion, up more than 3 percent from 2016’s sales.

© iStock.com / JoeCollver

Global coatings manufacturer PPG (Pittsburgh) announced its fourth-quarter earnings report Thursday morning (Jan. 18), as well as its 2017 year-end report, boasting net sales increases in each.

PPG also shared its commitment to spend on acquisitions and share repurchases in 2018.

“… [We] continue to have strong financial flexibility and are committed to deploy a minimum of $2.4 billion of cash in 2018 on acquisitions and share repurchases as part of our previously communicated target to deploy $3.5 billion in 2017 and 2018 combined,” said PPG chairman and CEO Michael McGarry.

“In the fourth quarter, we delivered solid and balanced sales growth in each major region, and both reporting segments achieved at least 2 percent sales volume growth,” said McGarry.

“Additionally, our aggregate selling prices improved for the third consecutive quarter as we made continued progress on our margin recovery efforts, despite higher than anticipated raw material inflation in the quarter driven by ongoing supply-related issues, including production curtailments from additional environmental enforcement in China.”

McGarry also noted that PPG completed its multi-year transformation plan with the sale of the U.S. fiber-glass business, the last of the glass segments for the company.

Earnings by Segment

Both segments showed growth of mid-single-digit percentages; however, the Industrial Coatings segment edged ahead with 8 percent growth at $1.6 billion, up $121 million from last year.

Sales volumes increased by more than 4 percent and favorable foreign currency translation added nearly $46 million, or about 3 percent. Acquisition-related sales added $27 million in sales, or about 2 percent year-over-year.

Segment income, however, was $212 million—down $24 million, or 10 percent. The company said that cost improvements and sales volume growth did not fully offset significant raw material inflation.

Aggregate industrial coatings and specialty coatings and materials sales volumes increased by a mid-single-digit percentage versus the prior year and outpaced global industrial production growth rates for the eighth consecutive quarter.

The Performance Coatings segment saw its highest increase of the year with net sales of $2.1 billion, up $144 million or around 7 percent versus 2016.

Net sales benefited from higher selling prices across most businesses and regions, PPG notes, and sales volume growth of more than 2 percent. Favorable foreign currency translation increased net sales by about $67 million, or over 3 percent.

PPG

The Performance Coatings segment saw its highest increase of the year with net sales of $2.1 billion, up $144 million or around 7 percent versus 2016.

Aerospace coatings and automotive refinish coatings led the segment success by improved sales of mid-single-digit percentages each.

Architectural coatings in the Americas and Asia Pacific regions had sales volumes advance by a low single-digit percentage year-over-year. In the U.S. and Canada, company-owned architectural same store sales grew by a solid mid-single-digit percentage, while aggregate sales volumes in national retailers and independent dealer networks were flat.

Latin American architectural coatings sales volumes were flat versus the prior year, as growing end-use market demand was offset by lingering unfavorable impacts of the earthquakes in Mexico. Sales volumes in architectural coatings in the EMEA region were consistent with 2016, and aggregate protective and marine coatings sales volumes were also flat year-over-year.

Year-End Wrap-Up

In addition to the $14.8 billion in net sales, PPG reported that its full-year net income from 2017 was $1.4 billion, or $5.46 per diluted share. Full-year 2017 adjusted earnings per diluted share from continuing operations was $5.87 per diluted share, representing an increase of nearly 4 percent year-over-year.

“Looking ahead, we are well positioned to benefit from broadening and more synchronized global economic growth due to our geographic reach, excellent product portfolio, and advanced customer technologies,” McGarry said.

“We expect minimal abatement in the first half of the year to the high level of raw material inflation that the coatings industry is experiencing. We will continue to work with our customers to address the inflationary environment and expect to realize additional selling price increases in 2018.”

After the Q4 release, the board of directors also declared a regular quarterly dividend of 45 cents per share, payable March 12 to shareholders of record Feb. 16.

   

Tagged categories: Business matters; Business operations; Earnings reports; Finance; PPG

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