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PPG Reports Decrease in Q2 Net Sales

Friday, July 19, 2019

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In its latest earnings report, global coatings supplier PPG Industries (Pittsburgh) reported a 3% decrease in net sales over this time last year, totaling $4 billion. The company reportedly continued to benefit from growth across several businesses, though, including aerospace and protective and marine coatings.

Net sales in constant currencies were roughly 1% higher than last year’s second quarter, which was largely attributed to higher selling prices totaling more than 2%. Volumes were also down 4%, which includes roughly 1.5% U.S. architectural coatings customer-assortment changes. Foreign currency translations negatively impacted net sales by more than 3%, totaling $130 million. Acquisition-related sales, as well as net of divestitures, both contributed to 2% sales growth.

Adjusted net income from continuing operations totaled $441 million. Michael H. McGarry, PPG chairman and chief executive officer, noted that the company is committed to recuperating operating margins, and that the company had also experienced higher gross profit and segment operating margins compared to last year.

Performance Coatings

PPG’s Performance Coatings segment—which includes architectural, protective and marine, auto refinish and aerospace coatings—net sales were down around 3%, or $65 million, totaling $2.4 billion. Sales in constant currencies remained even with last year, and acquisition-related sales amounted to $15 million, which is largely attributed to the SEM acquisition. Segment volumes were also down 3%, which led to a 2% reduction in segment sales—around $60 million. Foreign currency translation also reduced net sales by nearly 3%.

© iStock.com / jfarleyphoto

In its latest earnings report, global coatings supplier PPG Industries (Pittsburgh) reported a 3% decrease in net sales over this time last year, totaling $4 billion. The company reportedly continued to benefit from growth across several businesses, though, including aerospace and protective and marine coatings.

Second-quarter segment income clocked in at $425 million, down $3 million, or roughly 1%, from last year, and foreign currency translation also reduced net sales by nearly 3%.

In turn, aerospace coatings sales volumes experienced a high-single-digit percentage uptick, and aggregate organic sales for protective and marine coatings increased by a high-single-digit percentage.

Architectural coatings sales for the Americas and Asia-Pacific decreased by a mid-single-digit percentage, and as for the U.S. and Canada, company-owned architectural coatings same-store sales were flat due to weather impacting demand. Sales in EMEA and Latin America increased by a low-single-digit percentage powered by higher selling prices.

Industrial Coatings

Income for the industrial coatings segment was up 5%, amounting to $235 million, up $12 million from last year. (This total includes unfavorable currency translations amounting to roughly $10 million.) The uptick was thanks to higher selling prices and cost management, but this was offset by lower sales volumes.

Net sales volumes for automotive OEM coatings decreased by a high-single-digit percentage, which was consistent with lower global automotive industry production rates.

“We were able to manage through the more challenging business environment with improved selling prices and continued, strong cost management,” said McGarry.

© iStock.com / jetcityimage

Architectural coatings sales for the Americas and Asia-Pacific decreased by a mid-single-digit percentage, and as for the U.S. and Canada, company-owned architectural coatings same-store were flat due to weather impacting demand. Sales in EMEA and Latin America increase by a low-single-digit percentage powered by higher selling prices.

“In reflection of the economic backdrop and to further strengthen our cost position, we announced and began to implement a new cost management program in the second quarter, and we expect the program to deliver $125 million of savings upon completion. Also, we are quickly integrating our recent acquisitions of SEM, Whitford and Hemmelrath, with each exceeding early expectations."

Looking Ahead

McGarry said that as the company looks to the third quarter, it expects industry demand to remain “sluggish.”

“We expect the momentum of our margin recovery to continue as we work with our customers and suppliers to further offset the multi-year raw material cost inflation we have experienced,” he said.

“We will also remain focused on aggressively managing our businesses, including achieving our target of fully offsetting the earnings impact from the prior year architectural coatings customer assortment changes. Lastly, we continue to have strong financial flexibility and will remain disciplined in our cash deployment with a focus on long-term shareholder value creation.”

   

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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