PPG Industries (NYSE:PPG) reported net sales for the second quarter 2012 of USD 4 billion. Net income for the quarter was USD 362 million, or USD 2.34 per diluted share, including nonrecurring charges
PPG Industries (NYSE:PPG) reported net sales for the second quarter 2012 of USD 4 billion. Net income for the quarter was USD 362 million, or USD 2.34 per diluted share, including nonrecurring charges. Adjusted net income for the quarter, excluding the nonrecurring charges, was USD 365 million, or USD 2.36 per diluted share. Second quarter 2011 net sales were USD 4 billion, and net income was USD 340 million, or USD 2.12 per diluted share. Second quarter 2012 results include after-tax charges of USD 3 million, or USD 2 cents per diluted share, for costs related to the company’s announced agreement to separate its commodity chemicals business and merge it with Georgia Gulf Corp. or its subsidiary. The company anticipates additional separation costs in the second half of 2012. There were no nonrecurring charges in the second quarter 2011.
“In the second quarter, PPG delivered the highest quarterly earnings per share in company history as a result of continued execution, strong cost discipline and effective cash deployment,” said Charles E. Bunch, PPG chairman and CEO. “These record earnings were achieved despite significantly weaker European and Latin American currency exchange rates and growth that varied by region and end-use market.” According to Bunch, the negative currency impacts reduced overall sales by 5% and resulted in a negative USD 10 cents per share earnings impact versus the second quarter 2011. The company reported that cash and short-term investments totaled approximately USD 1.2 billion at the end of the second quarter 2012. Year-to-date cash from operations was approximately USD 430 million, an improvement of about USD 175 million versus the prior year.
Performance Coatings segment sales for the quarter were USD 1.2 billion, up 1% versus the prior year. The negative impact of foreign currency translation was offset by higher selling prices. The aerospace business delivered strong growth in all regions, and U.S. architectural coatings sales were seasonally stronger than the first quarter and improved by mid-single-digit percentages over a difficult prior-year comparison period that included channel stocking for the new Olympic One product. Protective and marine coatings volumes were muted, with gains in protective coatings offset by lower marine demand. Automotive refinish volumes declined due to lower European demand and customer destocking. Segment earnings for the quarter of USD 204 million were level with the prior-year period.
Industrial Coatings segment sales for the quarter were USD 1.1 billion, an increase of USD 24 million, or 2%, versus the prior year. Segment volumes grew by more than 20% in the United States, including strong automotive OEM (original equipment manufacturer) coatings business performance. Growth in emerging regions continued but was mixed by end-use market, including in Asia where strong automotive OEM coatings results outpaced lower demand in construction-related markets. European volumes declined by about 10%. Sales growth was tempered by the negative impact of foreign currency translation, which reduced sales by nearly USD 60 million. Selling prices improved in response to higher input cost inflation. Segment earnings for the quarter were USD 143 million, an increase of USD 28 million from the prior year. Earnings were aided by the higher volumes and continued cost discipline.
Architectural Coatings – EMEA (Europe, Middle East and Africa) segment sales for the quarter of USD 601 million decreased USD 10 million, or 2%, versus the prior year due to lower volumes partly offset by price. Currency translation negatively impacted sales by 10% but was offset by sales from the Dyrup acquisition completed in January 2012. Despite mid-single-digit segment volume declines, segment earnings grew by USD 14 million versus the prior year’s second quarter to reach USD 64 million, aided by acquisition performance and continued cost-management actions. The prior year included higher costs relating to a large customer bankruptcy, and that year-over-year benefit was negated by the negative impact of foreign currency translation. Optical and Specialty Materials second quarter 2012 segment sales of USD 314 million were down USD 12 million, or 4%, versus the prior year due to the negative impact of foreign currency translation. Segment volumes were flat and included negative impacts from weakened European market conditions and optical customer inventory management. Segment earnings grew USD 5 million year-over-year to USD 95 million, aided by cost management.
Commodity Chemicals segment sales for the quarter of USD 427 million were down USD 43 million, or 9%, versus the prior year. Selling prices were lower year-over-year and modestly lower than the first quarter 2012. Chlorine demand weakened during the quarter, and volumes were also slightly lower year-over-year. Lower natural gas input costs and cost management offset the sales declines. Segment earnings were USD 106 million, level with the second quarter 2011. Glass segment sales were USD 273 million for the quarter, down USD 1 million from the prior year. Higher flat glass volumes were offset by lower pricing and the negative impact of foreign currency translation. Fiber glass pricing declined from prior-year levels, driven by reduced European and Asian demand. Segment earnings were USD 23 million, a decrease of USD 6 million from the prior-year quarter as a result of lower pricing and lower fiber glass equity earnings.