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PPG Reports Decrease in Q1 Net Sales

Friday, April 19, 2019

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Global coatings supplier PPG Industries (Pittsburgh) reported a 4 percent decrease in net sales for its first quarter, while also reporting the completion of the acquisition of automotive coatings manufacturer Hemmelrath and low-friction coatings manufacturer Whitford Worldwide.

Net sales were reportedly $3.6 billion, down roughly 4 percent in comparison to last year’s first quarter, and net sales in constant currencies were flat, which was aided by 2.6 percent higher selling prices. Volumes also saw a 3 percent decline. Half of the decline in sales volumes was attributed to previously announced architectural coatings customer-assortment changes in the national retail do-it-yourself segment.

The company’s adjusted net income from continuing operations was $330 million. Michael H. McGarry, PPG chairman and chief executive officer, noted that first quarter operating margins were higher than last year.

Performance Coatings

PPG’s Performance Coatings segment, which includes architectural, protective and marine, auto refinish and aerospace coatings, saw a 2 percent decrease in net sales in the first quarter, totaling $2.1 billion, down $52 million from last year. There was a 2 percent increase in sales in constant currencies, which was attributed to increased selling prices. Sales related to acquisitions totaled $15 million. Segment volumes were also down 2 percent, and unfavorable foreign currency translation lowered net sales by 4 percent, or roughly $85 million.

© iStock.com / jfarleyphoto

Global coatings supplier PPG Industries (Pittsburgh) reported a 4 percent decrease in net sales for its first quarter, while also reporting the completion of the acquisition of automotive coatings manufacturer Hemmelrath and low-friction coatings manufacturer Whitford Worldwide.

Income in the segment was up 6 percent, $297 million, up $17 million from last year’s first quarter, which includes a $10 million unfavorable foreign currency translation impact.

Sales for aerospace coatings increased over 10 percent for the fourth quarter in a row, driven by technology platform growth and outpacing industry demand, according to PPG. Protective and marine aggregate sales volumes also saw a 10 percent increase, with both segments bringing in positive contributions.

Architectural coatings sales for the Americas and Asia-Pacific saw a high-single-digit percentage decline, but in the U.S. and Canada, company-owned architectural coatings store sales grew by a low-single-digit percentage. Architectural sales volumes in Latin America were “modestly lower,” and sales in Europe, the Middle East and Africa increased by a mid-single-digit percentage.

Industrial Coatings

Segment income was $218 million, down $21 million, or 9 percent from last year, which was attributed to $10 million in unfavorable foreign currency translations. Net sales were down 6 percent, totaling $1.5 billion, down $105 million from last year’s first quarter. Numbers were driven by higher selling prices, though this was partially offset by 5 percent lower sales volumes. Unfavorable foreign currency translation put an $80 million dent in sales.

Automotive OEM coatings volumes decreased by a high-single-digit percentage, which was in line with lower global automotive industry production rates.

© iStock.com / jetcityimage

Architectural coatings sales for the Americas and Asia-Pacific saw a high-single-digit percentage decline, but in the U.S. and Canada, company-owned architectural coatings store sales grew by a low-single-digit percentage. 

“We continued to experience cost inflation in raw materials, logistics and wages, and have additional initiatives under way to offset the cumulative impacts from this inflationary cycle,” said McGarry.

“During the first quarter, we achieved strong double-digit percentage sales volume growth in our aerospace and protective and marine coatings businesses. However, our aggregate sales volumes were lower due to weaker industry demand in automotive OEM and in certain segments of general industrial coatings. In addition, our focus on margin recovery resulted in us passing on certain, modest levels of business during the quarter.

“We are happy to welcome SEM, Whitford and Hemmelrath to the PPG family, having now closed all three recently announced acquisitions. Our pipeline for acquisitions remains active and we continue to focus our cash deployment on maximizing long-term shareholder value.”

Looking Ahead

McGarry noted that in looking ahead to the second quarter, PPG expects industry demand in a number of markets to “remain mixed.”

“More broadly, we remain optimistic that economic activity will improve in the second half of the year, particularly in China. We will continue to monitor the macro environment and be prepared to implement further cost-savings initiatives, if warranted. We are still targeting full-year sales growth of 3 to 5 percent and adjusted earnings-per-share growth of 7 to 10 percent, both excluding currency translation impacts,” McGarry said.

   

Tagged categories: AF; AS; Asia Pacific; Coatings manufacturers; Earnings reports; EMEA (Europe, Middle East and Africa); EU; Finance; Latin America; Market; NA; North America; OC; PPG; Program/Project Management; SA

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