PPG reports strong first quarter
PPG Industries reported sales for the first quarter 2011
of $3.5 billion, an increase of 13 percent versus the prior
year’s first quarter. The company posted double-digit
percentage sales increases in each major region, and all reporting
segments achieved higher sales volumes and pricing. Reported
net income for the quarter increased to $228 million. First quarter 2010 sales were $3.1 billion, and reported net income was
$30 million.
First quarter 2010 adjusted net income was $115 million.
First quarter 2010 net income included an after tax charge of
$85 million as a result of a change in U.S. tax law that was part
of the U.S. Patient Protection and Affordable Care Act enacted in
March 2010. A Regulation G Reconciliation of adjusted net income to reported net income is included below.
“We’ve continued our strong earnings momentum and have
posted our third consecutive quarterly record,” said Charles
Bunch, PPG chairman and chief executive. “Each of our reporting segments delivered higher year-over-year earnings driven by
continued volume growth from a broadening global industrial
recovery, including strengthening conditions in Europe.
“Our coatings segments have continued to deliver strong results. In addition to demand improvements, higher pricing in
each of our coatings businesses and continued aggressive cost
management have buffered the impact of persistent raw mate-
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rial cost increases,” he said. “Operating margins in the Perform-
ance Coatings, Industrial Coatings and Architectural Coatings -
Europe, Middle East and Africa (EMEA) segments matched
those of the previous year, and total coatings segment earnings
grew by nearly 12 percent versus the prior year results.”
Bunch stated that construction activity remained low in de-
veloped regions and that there were no signs of imminent im-
provement. Despite this market weakness, the company achieved
modest year-over-year volume gains in these markets. Bunch also
said that volume growth contributed to record results in the Op-
tical and Specialty Materials segment, and that the company’s
Commodity Chemicals and Glass segments benefited from higher
pricing resulting in substantially higher earnings versus the re-
cession-impacted first quarter of last year.
“We have continued to deploy our cash for earnings accretion,” he said. While PPG’s recent acquisition activity has been
minimal, Bunch said, the company repurchased about $275 million of stock in the quarter, bringing its total repurchases over
the past nine months to about $700 million.
“Looking ahead,” Bunch said, “we remain optimistic and ex-
pect similar economic trends in the second quarter, which is sea-
sonally our strongest sales quarter of the year. We anticipate
further pricing gains in every segment as we continue to confront
raw material cost inflation. Finally, we continue to work on ini-
tiatives to deploy our cash to grow earnings. We will continue
to apply our disciplined approach toward evaluating acquisi-
tions, and we expect to announce several small- to medium-sized
bolt-on acquisitions over the next six to nine months.”
Performance Coatings segment sales in the first quarter 2011
increased $87 million, or nine percent, versus last year’s first
quarter as a result of higher selling prices and volumes that im-
proved in every region. Sales were aided by strong sales growth
in the aerospace and automotive refinish businesses. The protec-
tive and marine coatings and architectural coatings - Americas
and Asia/Pacific businesses also achieved sales gains. Segment
earnings grew $12 million to a first quarter record of $139 mil-
lion, as volume and pricing gains and a lower cost structure off-
set increased raw material costs.
Industrial Coatings segment sales for the quarter rose $132 million, or 15 percent, versus improving prior year results. Volumes
continued to recover in each region and in many end-use markets.
Each business in the segment also realized higher pricing and favorable currency translation that modestly aided sales. Segment
earnings for the quarter were $116 million, an increase of $15 million from the prior year’s first quarter due to the volume improvement. The adverse effect of raw material cost inflation was
partially countered with higher pricing, aggressive cost management and further efforts to expand raw material sourcing.
Sales for the Architectural Coatings - EMEA segment for the
quarter increased $35 million, or eight percent, versus the prior
year as a result of positive volumes and pricing. Segment earnings were $12 million for the quarter, an increase of $1 million
from the prior year’s first quarter on the improved volumes.
Raw material cost inflation is being combated by higher selling
prices and product reformulation efforts, including using dif-
22 | Coatings World
www.coatingsworld.com
May 2011
