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PPG Q3 Numbers Show Slight Sales Uptick

Friday, October 19, 2018

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Global coatings supplier PPG (Pittsburgh) released its third-quarter financial report Thursday, (Oct. 18) showing an increase in net sales, with sales volumes remaining flat and volume growth offset by lower U.S. architectural coatings volumes due to previously announced changes in customer assortment.

Net sales, totaling $3.8 billion for this quarter, were up 1 percent from last year. Sales volumes were flat, with volume growth increasing by 2 percent, but these were offset by the aforementioned lower coatings volumes. Continuing operations net income totaled $368 million, and adjusted net income clocked in at $353 million.

“We delivered strong net sales growth in local currencies of more than 3 percent,” said Michael McGarry, PPG chairman and chief executive officer.

“This growth was driven by higher selling prices and continued strong volume growth from several PPG business units, including aerospace and general industrial coatings. Our selling prices have improved for six consecutive quarters, and we have additional pricing actions underway. In addition, we continue to take aggressive steps to recover our operating margins, including acceleration of restructuring actions and disciplined cost management.”

Performance Coatings

Segment income for Performance Coatings totaled $331 million, 9 percent lower than 2017’s third quarter. Segment income was reportedly down due to lower sales volumes and higher costs for raw materials and logistics.

© iStock.com / jfarleyphoto

Global coatings supplier PPG (Pittsburgh) released its third-quarter financial report Thursday, (Oct. 18) showing an increase in net sales, with sales volumes remaining flat and volume growth offset by lower U.S. architectural coatings volumes due to previously announced changes in customer assortment.

At $2.3 billion, net sales for PPG’s Performance Coatings segment remained flat from the prior year, with sales increasing by 2 percent due to higher selling prices. This was offset by slightly lower sales volumes, however. Net sales were lowered by 2 percent due to unfavorable foreign currency translation, amounting to roughly $45 million.

Aerospace coatings sales volumes saw a low-teen-digit percentage increase due to consistent customer demand across all major regions. Organic sales for automotive refinish coatings saw a mid-single-digit percentage decline thanks to a change in customer order behaviors; both European and U.S. customers currently have a large amount of inventory due to lower end-use market demand. The protective and marine coatings segment also experienced a mid-single-digit percentage sales volume bump.

Organic sales for architectural coatings in the Americas and Asia-Pacific saw a low-single-digit percentage decline, and sales volumes in Latin America experience a mid-single-digit increase. Company-owned store sales in the U.S. and Canada saw a high-single digit percentage increase.

Industrial Coatings

Segment income was down 25 percent, or $56 million, totaling $169 million; the reduction was attributed to an inflation of raw material and logistics cost, which was somewhat offset by higher selling prices and increased sales volumes. Unfavorable currency translation resulted in a $5 million impact.

© iStock.com / jetcityimage

Organic sales for architectural coatings in the Americas and Asia-Pacific saw a low-single-digit percentage decline, and sales volumes in Latin America experience a mid-single-digit increase. Company-owned store sales in the U.S. and Canada saw a high-single digit percentage increase.

In the Industrial segment, net sales were roughly $1.5 billion, up 3 percent, or $42 million, compared to last year. Year-over-year sales volumes also saw a 2 percent increase, with selling prices seeing a similar bump at 1 percent. Sales related to acquisitions totaled $30 million, a 2 percent increase from the prior year.

Automotive OEM coatings sales were reportedly flat, but in a better position than overall global automotive OEM industry builds. General industrial coatings sales volumes also experienced solid growth, with both Europe and Latin America experiencing above-market growth. Packaging coatings sales experienced a mid-single-digit percentage increase. Above-industry growth rates were largely attributed to costumers continuing to adopt company technologies.

Looking Ahead

McGarry noted that PPG expects normal business seasonality in the fourth quarter, along with overall global economic growth remaining positive. With increasing industrial production volatility and inconsistency in emerging region growth rates as the third quarter unfolded, the company expects these trends to continue into the last segment of the year. PPG also expects consistent sales trends moving forward.

“Finally, we continued to deploy cash with nearly $1.3 billion of share repurchases during the first nine months of 2018, including approximately $250 million in the third quarter,” McGarry added.

“Our acquisition pipeline remains active. We expect deployment on acquisitions and share repurchases in the fourth quarter to total approximately $1 billion, which will increase our balance sheet leverage while still providing financial flexibility heading into 2019. We remain focused on executing our strategy, which we believe will drive further shareholder value creation.”

   

Tagged categories: Coatings manufacturers; Earnings reports; Finance; Market; PPG

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