PPG Industries reported net sales for the third quarter 2011 of $3.8 billion, an increase of 11 percent versus the prior year’s third quarter.
PITTSBURGH – PPG Industries reported net sales for the third quarter 2011 of $3.8 billion, an increase of 11 percent versus the prior year’s third quarter. Net income for the quarter increased to $311 million, or $1.96 per diluted share. Third quarter 2010 net sales were $3.5 billion, and net income was $262 million, or $1.58 per diluted share.
“This is the fifth consecutive quarter in which we eclipsed our prior quarterly earnings record,” said Charles E. Bunch, PPG Chairman and CEO. “This consistent improvement in performance, especially in light of today’s economic backdrop, demonstrates the value of our management’s aggressive focus on operations and the continuing benefit of the structural changes that we have made to the company the past few years, including lowering our cost base and expanding in emerging regions. In addition, these results reflect the continuing benefits of our disciplined deployment of our strong cash position.”
Bunch said pricing on a corporate basis increased for the sixth consecutive quarter, as all 13 PPG businesses implemented higher pricing this quarter to further counter higher input costs. “PPG’s overall volumes were flat year-over-year. Demand in most markets in North America was up modestly and fairly consistent with the prior quarter’s growth rate. Continued volume gains in emerging regions such as Asia/Pacific and Latin America offset lower demand in Europe, which was driven principally by the company’s consumer-oriented businesses,” he said.
“Both the Performance Coatings and Optical and Specialty Materials segments delivered record third quarter earnings, aided by record performance in several businesses driven by PPG’s leading technologies,” Bunch said. “The Industrial Coatings segment delivered its best third quarter earnings in more than a decade on emerging-region growth and stronger global auto production. Architectural coatings demand was down slightly due to continued anemic construction markets. Results in the Commodity Chemicals segment were excellent despite several unplanned production outages that crimped sales volumes, increased maintenance costs and reduced capacity utilization. Also, higher planned maintenance resulted in lower Glass segment results,” he said.
Bunch said that PPG’s year-to-date cash from operations is up more than 10 percent versus the prior year. “Dividends and share repurchases have totaled more than $900 million so far in 2011, providing evidence of our commitment to return cash to our shareholders,” he said. The company reported that it repurchased 3.25 million shares of stock in the third quarter, bringing the year-to-date total number of shares repurchased to 7.5 million.
“Looking ahead, we expect current macro and regional economic trends to continue, supported to date by October activity levels in many of our businesses,” he said. “In general, we anticipate normal seasonal fourth quarter patterns to occur. Raw material inflation rates are flattening, and we are in the process of implementing additional price increases in several businesses to counter the inflation we have absorbed. Our cash position remains strong, and we intend to continue to focus cash deployment on earnings growth initiatives. Finally, we are keeping a watchful eye on the global economy, and we are prepared to adapt to changing conditions,” he concluded.
PPG reported that it ended the quarter with approximately $1.3 billion in cash and short-term investments.
Performance Coatings segment sales for the quarter were $1.2 billion, up $105 million, or 10 percent, versus last year’s third quarter. Each business delivered higher selling prices, and foreign currency translation aided segment sales. Overall segment volumes were flat, with improved volumes in the aerospace and automotive refinish businesses offsetting lower volumes in the protective and marine coatings business due to an expected decline in original-equipment ship builds. Architectural coatings sales were up more than 10 percent over the prior year, reflecting higher pricing needed to address inflation. Segment earnings grew $16 million versus last year to a third quarter record of $190 million, reflecting the benefit from the higher sales and improved segment mix, as higher selling prices countered raw material cost inflation.
Industrial Coatings segment sales rose $112 million to $1 billion, a 12 percent increase over last year’s third quarter. Volume grew 3 percent in the quarter based on continued emerging-region growth and increased global auto builds. Each business achieved higher pricing, and favorable currency translation added 5 percent to year-over-year sales. Segment earnings for the quarter were $101 million, an increase of $15 million on the prior year’s third quarter, as volume and price gains were coupled with aggressive cost management to offset input cost inflation.
Sales for the Architectural Coatings – EMEA (Europe, Middle East and Africa) segment for the quarter increased $61 million, or 12 percent, versus the prior year’s third quarter to $573 million. Favorable foreign currency translation represented two-thirds of the increase. Pricing was positive, while volumes were down 2 percent. Third quarter segment earnings grew $3 million year-over-year to $53 million. Pricing increases combined with cost controls and currency translation offset raw material cost inflation.
The Optical and Specialty Materials segment delivered record third quarter sales and all-time record quarterly earnings. Segment sales were $311 million for the quarter, up $23 million, or 8 percent, versus the prior year. Segment earnings improved by $11 million over third quarter 2010 to $93 million, as higher pricing and consistent growth in emerging regions and North America outweighed declining volumes in Europe.
Commodity Chemicals segment sales were $445 million for the quarter, an increase of $75 million, or 20 percent, over the prior year’s third quarter largely due to higher pricing, which was offset by a decrease in volumes due to unplanned production outages and low inventory levels. Higher prices were the key factor in increasing segment earnings to $104 million, up $44 million versus the prior year despite notably higher maintenance costs due to the production outages, which occurred early in the quarter.
Glass segment sales were $273 million, up $13 million, or 5 percent, compared with the prior year as a result of improved pricing and favorable foreign currency translation, which were offset slightly by lower volumes due to planned fiber glass production outages. Segment earnings were $23 million, a decrease of $9 million from the prior-year quarter primarily due to the lower volumes and higher maintenance costs.
PPG Reports Record Third Quarter
October 25, 2011