PPG Industries reported sales for the second quarter 2011 of $4.0 billion, an increase of 15 percent versus the prior year’s second quarter. Each major region and reporting segment achieved volume and price gains.
PITTSBURGH – PPG Industries reported sales for the second quarter 2011 of $4.0 billion, an increase of 15 percent versus the prior year’s second quarter. Each major region and reporting segment achieved volume and price gains. Net income for the quarter increased to $340 million, or $2.12 per diluted share. Second quarter 2010 sales were $3.5 billion, and net income was $272 million, or $1.63 per diluted share.
“Our strong execution during the quarter enabled us to deliver excellent financial performance, including record earnings for any quarter,” said Charles E. Bunch, PPG Chairman and CEO. “We implemented further pricing initiatives and managed our businesses aggressively to overcome continued input cost inflation, a global economy that has only partially recovered and several transitory impacts to some businesses’ volumes early in the quarter. Our strong performance underscores the benefits of our broad end-use market reach and the global business portfolio we have built,” Bunch said.
Bunch noted that April was the weakest month in the quarter, with negative year-over-year company volumes due to several issues including the full brunt of automotive OEM industry production curtailments due to supplier disruptions related to the March earthquake and tsunami in Japan, poor weather-related architectural painting conditions in the United States, and production downtime in the Commodity Chemicals segment. “Our sales volumes rebounded soundly after April, with most segments realizing mid-single-digit percentage volume gains in May and June versus last year,” he said.
“Our coatings segments delivered excellent results. The Performance Coatings segment established a new all-time earnings record, and the Industrial Coatings segment earnings matched the previous record. This was done despite operating margins for these segments that dropped modestly versus last year as a result of the weakened April volumes and an architectural customer bankruptcy charge,” Bunch said. He stated that coatings margins in May and June were consistent with the prior year, as volume growth resumed and prices were increased in all eight coatings businesses to counter inflationary pressures.
The company’s Optical and Specialty Materials segment achieved record quarterly sales and earnings, according to Bunch, with further geographic expansion as increased advertising capitalized on high-growth opportunities in emerging regions. Sales in the Commodity Chemicals segment grew due to higher pricing and earnings doubled, despite increased maintenance costs and lower facility utilization due to scheduled and unscheduled downtime. Glass segment results were up notably versus last year based on improved fiber glass pricing, he added.
“We anticipate the global economic recovery will continue, although at its current uneven pace,” Bunch said. “The resumption of automotive OEM production and our position in high-growth businesses and regions, such as aerospace and Asia/Pacific, will supplement PPG’s growth in the remainder of the year.” He noted that although inflation has moderated somewhat, PPG intends to secure additional pricing in businesses where it has been unable to fully offset inflation despite aggressive cost management and further pricing actions this past quarter. These factors are expected to be coupled with continued positive price trends in the Commodity Chemicals segment, he said.
“Lastly, we are continuing to utilize our strong cash position. In the second half of the year, we expect to deploy $500 million to $1 billion of cash focused on earnings accretion, and we will continue our heritage of returning cash to our shareholders.” Bunch said that over the past 12 months, the company has returned 100 percent of cash generated from operations to shareholders in the form of dividends and share repurchases.
PPG ended the quarter with approximately $1.25 billion in cash and short-term investments. During the quarter, the company finalized the acquisitions of Equa-Chlor and Ducol Coatings and announced its agreement to acquire Dyrup A/S.