PPG Industries Inc. reported record earnings for any quarter in its history, as second-quarter sales and earnings rose sharply and the company’s coatings businesses delivered “excellent results.”
Sales for the quarter surged 15%, to $4.0 billion, while net income rose sharply, to $340 million from $272 million in the second quarter of 2010. For the first half of the year, total sales were $7.519 billion, compared to $6.584 billion for the first half of 2010. Net income was $568 million, up from $302 million in 2010.
|Charles E. Bunch|
PPG chairman and CEO
“Our strong execution during the quarter enabled us to deliver excellent financial performance, including record earnings for any quarter,” said Charles E. Bunch, PPG chairman and CEO.
“We implemented further pricing initiatives and managed our businesses aggressively to overcome continued input cost inflation, a global economy that has only partially recovered and several transitory impacts to some businesses’ volumes early in the quarter,” Bunch said. “Our strong performance underscores the benefits of our broad end-use market reach and the global business portfolio we have built.”
He added that, following a relatively weak month of April, “coatings margins in May and June were consistent with the prior year, as volume growth resumed and prices were increased in all eight coatings businesses to counter inflationary pressures.” April’s results were affected by the March earthquake and tsunami in Japan, which caused OEM supplier disruptions, and poor weather-related architectural painting conditions in the U.S.
The Performance Coatings segment established a new all-time earnings record, and Industrial Coatings segment earnings matched the previous record, Bunch said. “This was done despite operating margins for these segments that dropped modestly versus last year as a result of the weakened April volumes and an architectural customer bankruptcy charge,” Bunch said.
Outside of the company’s coatings businesses, record quarterly sales and earnings were achieved by the Optical and Specialty Materials segment, and strong sales and earnings results were recorded by the Commodity Chemicals and Glass segments.
The company reported that it ended the quarter with approximately $1.25 billion in cash and short-term investments. During the quarter, the company finalized the acquisitions of Equa-Chlor and Ducol Coatings and announced its agreement to acquire Dyrup A/S.
Performance Coatings segment sales for the quarter were $1.2 billion, a gain of $119 million, or 11%, compared to the second quarter of 2010. Higher selling prices and foreign currency translations helped offset lower architectural-coatings volumes resulting from poor weather conditions in April. Performance Coatings earnings rose $14 million to an all-time quarterly record of $204 million.
For the first half, Performance Coatings sales were $2.3 billion, up from $2.1 billion in 2010. Earnings were $343 million, compared to $317 million the year before.
Industrial Coatings segment sales rose $136 million, or 14%, to $1.1 billion, from the second quarter of 2010. Sales growth was strongest in Asia/Pacific, followed by Europe. Segment earnings were $115 million, an increase of $3 million from the prior-year second quarter.
For the first half, Industrial Coatings sales were $2.1 billion, up from $1.8 billion in 2010. Segment earnings were $231 million, compared to $213 million the year before.
Sales for the Architectural Coatings—EMEA (Europe, Middle East and Asia) segment were $611 million, an increase of 22%, or $111 million, from 2010. Earnings were unchanged from the year before, at $50 million.
For the first half, Architectural Coatings—EMEA sales were $1.1 billion, up from $936 million in 2010. Segment earnings were up slightly, to $62 million from $61 million the year before.
Included in the second-quarter results for the Architectural Coatings—EMEA segment was a charge of approximately $9 million related to the second-quarter bankruptcy filing of a U.K.-based “do-it-yourself” (DIY) home-center customer.
Positive Outlook, Despite ‘Uneven’ Economic Recovery
Commenting on the company’s outlook for the rest of the year, Bunch said, “We anticipate the global economic recovery will continue, although at its current uneven pace.”
“The resumption of automotive OEM production and our position in high-growth businesses and regions, such as aerospace and Asia/Pacific, will supplement PPG’s growth in the remainder of the year,” he said.