Coatings World - April 2014

“Distributor success is something PPG
cares about and is absolutely committed to,
and that means providing great products and
great training,” said Bob Wenzinger, PPG dis-
tributor programs director. “We continue to
place a significant emphasis on making sure
all PPG distributors have everything they
need to build and operate an efficient and ef-
fective business.” According to Wenzinger, the
distributor training PPG offers can have a sig-
nificant and positive impact on every aspect
of a distributor’s operations. Classes cover
general operations, finance, business develop-
ment and management, conflict resolution,
selling skills, commercial business develop-
ment and more. “We’re always enhancing
our distributor training offerings, making
sure they’re relevant and rewarding,” added
Wenzinger. “We see PPG distribu-
tors at all levels learning and im-
proving from our courses.”
Training will be held through-
out the year in PPG Business Development
Centers and conference facilities in the
U.S and Canada. Courses are led by PPG
leadership as well as by consultants in the
automotive refinish industry. CW

Results of U.S. Architectural Coatings Industry Research Report
Which Compared Business Trends in 1Q14 vs. 1Q13

Each month, Northcoast Research surveys a large sample of paint retailers throughout the United States to get a sense for current business trends. Please note that of the three primary architectural coatings channels (paint stores, home centers, and retail distributors), this survey is primarily reflective of the distributor channel which tends to see volume growth less than the industry; therefore, we view the results as a directional indicator more so than absolute industry volumes. For inquiries regarding this report please contact Kevin Hocevar at 216-468-6924 or kevin.hocevar@northcoastresearch.com.

Architectural Coatings Sales — Volumes Up 1.8% in 1Q14 vs. 1Q13 According to industry participants, average sales volumes in October remained steady at 1.8% year-over-year following similar growth of 1.9% in 4Q13 and indicating continued momentum after seeing slightly lower growth in September. Harsh winter weather likely tempered growth however as exterior paints significantly underperformed interior, but expectations are that this demand is being pushed into later periods and demand will accelerate once spring weather begins. Overall, 53% of respondents witnessed an increase in volumes vs. only 16% that saw volumes decline, which averaged out to 1.8% volume growth and a net increase of 37%.

Price of Paint from Suppliers — 1Q14
Paint Prices Up Slightly vs. 1Q13

57% of contacts noted a year-over-year
increase in the cost of a gallon of paint
from suppliers in 1Q14 as our paint price
index increased 0.8%. This compares to a
year-over-year increase of between 1.5%-
2.0% throughout 2013. We ultimately
believe that the slight increase is due to
continued anniversarying of recovering
raw material cost inflation from when raw
materials were surging coupled with price
increases from manufacturers with paint
stores spilling into the retail distributor
channel. We believe that pricing could
potentially begin to increase in the up-
coming months as 28% of respondents’
indicated that they have been notified of
a price increase in the range of 1%-6%,
which is meaningfully higher than has
been seen in our previous reports.

Raw Materials — TiO2 Remains Stable
but Still Seeing Some Declines

Titanium dioxide (TiO2) prices have been stabilizing in recent months after witnessing sharp declines in early 2013, although we have seen modest declines recently.

Additionally, propylene has been stable
thus far in 2014 although pricing still re-
mains at higher levels. Overall, our data
and recent conversations with industry
contacts suggest that price increases at-
tempted by TiO2 producers in January
2014 have been unsuccessful with no evi-
dent traction for price increases to stick
until at least 2H14. As a result, we believe
that the price/raw relationship from paint
manufacturers will remain favorable dur-
ing the near term.

3 Month Outlook — Outlook Positive
Due to Strong Paint Season Expecta-
tions

Our proprietary Architectural Coatings Outlook Index reached 0.92 during 1Q14 which marks the highest index reading since the inception of our survey. Please note that the highest possible reading is +2 (indicating all contacts have a “very positive” outlook) and the lowest possible reading is -2 (indicating all contacts have a “very negative” outlook. A reading of 0.92 represents a strong outlook as the busy season approaches and contacts anticipate business to accelerate as weather returns to normal patterns. The vast majority (75%) of contacts share a positive (57%) or very positive (18%) 3-month outlook, and the remaining 25% believe that current trends will remain the same.