MONDAY, APRIL 22, 2024
Global coatings supplier PPG (Pittsburgh) reported 2024 first quarter net sales of about $4.3 billion, a 2% decrease from the year prior, in a financial results press release issued on Thursday (April 18). Organic sales also declined 2% versus last year.
First Quarter Performance
Net sales for the quarter were reportedly roughly $4.31 million, a decrease of about 2% compared to 2023.
For the first quarter, reported net income from continuing operations was $400 million, or $1.69 per diluted share, up exponentially from 2023’s first-quarter figure of $264 million, or $1.11 per diluted share.
“We achieved year-over-year adjusted EPS growth for the fifth consecutive quarter despite continued challenges in the macro environment. The company benefited from our well-established businesses in Mexico and China, our second and third largest net sales countries, respectively. We also delivered organic sales growth in India and in several long-cycle businesses such as protective and marine coatings and aerospace coatings, where our backlog grew,” commented Tim Knavish, PPG Chairman and Chief Executive Officer.
“These gains were mitigated by a large customer load-in and pass-through energy surcharges in Europe that occurred in the prior-year period, lowering year-over-year sales comparisons by approximately 130 basis points. During this year’s first quarter, we were also impacted by lower demand in Europe, including an early Easter holiday which reduced the number of selling days in March, and ongoing tepid global demand for industrial coatings.
“We continue to make progress on returning to our historic segment margin profile with an aggregate segment margin improvement of 60 basis points, marking the sixth consecutive quarter of year-over-year improvement. 2024 is expected to be another year of excellent cash flow, and our balance sheet remains strong, including lower inventories year over year, providing us with ongoing shareholder value creation opportunities. We completed approximately $150 million of share repurchases in the first quarter.”
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Global coatings supplier PPG (Pittsburgh) reported 2024 first quarter net sales of about $4.3 billion, a 2% decrease from the year prior, in a financial results press release issued on Thursday (April 18). |
Performance Coatings
First-quarter sales for PPG’s Performance Coatings segment totaled about $2.61 billion, down from approximately $2.63 million, or about 1%, compared to 2023. The net sales decrease was reportedly a result of higher selling prices and favorable foreign currency translation were offset by lower sales volumes.
Year-over-year first quarter sales volume comparisons were unfavorably impacted by a prior-year, $40 million Walmart sales load-in benefit and the earlier timing of Easter in 2024, PPG explains.
Organic sales for architectural coatings in Europe, Middle East and Africa were reportedly down by a mid-single-digit percentage; however, architectural coatings in Mexico delivered another solid quarter.
Architectural coatings sales in the U.S. and Canada were lower due to the prior-year Walmart load-in, more than offsetting current year growth in the professional contractor segment. Absent the impact of the load-in, year-over-year sales volumes grew a low single-digit percentage in the business.
Automotive refinish coatings organic sales were reportedly flat, as a challenging prior year comparison in the U.S. offset solid growth in Asia Pacific, Latin America and Europe. Protective and marine coatings also delivered low single-digit percentage organic sales growth driven by energy and marine-related demand.
Sales of PPG’s technology-advantaged aerospace products remained strong, as the business delivered mid-single-digit percentage organic sales growth year over year, while the order backlog increased to $275 million, PPG reports.
Segment income was higher than the prior year by 2% at $402 million, mainly due to higher selling prices and input costs, which moderated from record levels, and were partially offset by lower sales volumes and increased wages.
Industrial Coatings
Compared to the prior year’s performance in the same quarter, net sales for PPG’s Industrial Coatings segment were about $1.7 billion, down 3% from 2023. The decrease was reflected in lower selling prices and slightly lower sales volumes.
Automotive OEM coatings organic sales reportedly decreased by a low single-digit percentage due to lower index-based selling prices and lower industry volumes in the U.S. and Europe, offset by PPG above-market growth in Asia Pacific and Mexico.
Industrial coatings organic sales also declined by a mid-single-digit percentage with subdued industrial activity in the U.S., Latin America and Europe more than offsetting strong PPG growth in China and India.
PPG notes that segment income was 4% higher than the prior year, as input costs moderated from historically high levels and manufacturing performance improved, which more than offset the impact from lower organic sales and higher wages.
Moving Forward
According to the press release, PPG anticipates that organic sales growth will be up in the low single digits for the second quarter of 2024, as well as fiscal year 2024.
The company reports that it is basing its projections for the second quarter and full-year 2024 based on current global economic activity, continued uneven global industrial production, uneven but stabilizing demand in Europe, continued growth in Mexico and solid PPG performance in China.
“Looking ahead, while global industrial production remains at low absolute levels, we believe that demand in China for our products will deliver solid organic growth. In Europe, demand is expected to stabilize as we progress through 2024, despite unevenness by country. In the U.S., economic conditions have remained subdued in several end-use markets, but we expect overall improvement as the year progresses. In Mexico, we forecast strong momentum to continue,” continued Knavish.
“We are executing on the strategic reviews of the architectural coatings U.S. and Canada business and global silicas products business that we announced in the first quarter. Our target is to determine a path forward for each of these assessments no later than the third quarter.
“PPG remains focused on various enterprise growth initiatives to drive higher sales volumes and fully capitalize on our technical and service capabilities. In the second quarter, we expect low single-digit percentage aggregate sales volume growth, led by our aerospace, protective and marine, and packaging coatings businesses and by Mexico, China and India.
“Thank you to our more than 50,000 employees around the world who partner with our customers every day to drive mutual success by providing best-in-class paints, coatings and specialty materials, including productivity-enhancing and sustainable solutions.”
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