PPG Q1 net income almost halves to $1.26bn, sales up 17%

17 April 2014 15:39 Source:ICIS News

(updates with further financial detail on segment performance)

LONDON (ICIS)--PPG industries first-quarter 2014 net income fell 48% to $1.26bn compared with a strong prior-year period, while sales rose 17% year on year in the quarter to $3.64bn as all segments reported volume growth, the US-based company said on Thursday.

In the first quarter last year, the company reported a $2.2bn non-recurring one-off gain from discontinued operations, following the separation of its commodity chemical business and subsequent merger with a subsidiary of Georgia Gulf into a new company, named Axiall.

In the corresponding quarter of 2014, PPG’s net income from discontinued operations included the sale of its stake at the Transitions Optical joint venture and its sunlens business, for which PPG earned $946m.

Net income from continuing operations grew strongly to $277m from $191m in the first quarter of 2013, said PPG.

“We achieved year-over-year global volume growth of 5%, our highest level in three years. Additionally, growth rates accelerated in each region versus recent quarters, including in Europe, where our volumes grew 5% as we benefited from the early stages of that region’s economic recovery,” said Charles Bunch, CEO of PPG.

PPG’s Performance Coatings division reported sales of $2.0bn, an increase of 27% compared with the same quarter of 2013. The rise came on the back of higher sales for automotive refinish and aerospace, which saw volume growth in all major regions.

Within the division, Architectural coatings net sales in North America over the quarter "grew modestly" year on year as results were negatively impacted by inclement weather.

“Protective coatings volume growth, including acquisition-related revenue synergies, offset weaker marine coatings sales, as marine new-build demand remained negative year-over-year but stable versus recent quarters,” the company added.

First-quarter sales in PPG’s Industrial Coatings division stood at $1.4bn, a 7% increase year on year, as its Automotive OEM (original equipment manufacturer) unit saw volumes grow 10% globally.

PPG’s glass segment reported sales of $266m, up 4% compared with the first quarter of 2013, on the back of an improvement in global fibre glass demand.

The company expects 2014 to continue delivering positive results, although it warned it would not be uniform across all regions, but remained confident its cash position would allow it to explore more acquisitions.

“We anticipate solid global growth to continue, but it will not be uniform across geographies or end-use markets. Additionally, we have a stronger cash position, which we intend to deploy in a timely, disciplined manner with a continued focus on earnings-accretive cash uses, including additional acquisitions and share repurchases,” said  Bunch.

By Jonathan Lopez