MOSCOW (MRC) -- PPG Industries has reported first-quarter net income down 95% year-on-year (YOY), to USD18 million, on net sales up 11%, to USD4.31 billion, as per the company's press release.
Adjusted earnings, excluding charges related to the wind-down of PPG’s business in Russia, totaled USD327 million, or USD1.37/share, down 27% YOY but well ahead of analysts’ consensus estimate of USD1.11/share, as reported by Refinitiv (New York, New York). Selling prices grew 10% YOY and volumes were down 3%, while raw material costs rose 25%, and energy and transport costs remained elevated during the quarter.
“Adjusted earnings exceeded our January guidance as we delivered excellent earnings leverage on higher-than-expected sales volumes,” says PPG chairman and CEO Michael McGarry. “The leverage benefits were aided by sequential quarterly improvements in manufacturing performance, including the benefit of more consistent raw material availability. We once again finished the quarter with a much larger than normal order backlog, totaling about $180 million, primarily in automotive refinish and aerospace coatings, and we expect further volume growth in these businesses in the coming quarters.”
Performance coatings segment sales grew 11% YOY, to USD2.57 billion, while segment income fell 17%, to USD319 million. Volumes fell 2% YOY, while selling prices rose 8%. “While demand remained strong in most end-use markets, raw material availability continued to constrain sales in many businesses, with the largest impacts in architectural coatings Americas and Asia Pacific, traffic solutions, and automotive refinish,” PPG says.
Industrial coatings segment sales rose 11% YOY, to USD1.74 billion, while segment income was down 43%, to USD140 million. Volumes declined 5% YOY, while selling prices increased 12%. “Industrial Coatings net sales increased primarily due to selling price increases across all businesses and acquisition-related sales, partially offset by lower sales volumes in comparison to strong, pandemic-related volume recovery in the prior year,” PPG says. “Most businesses were also impacted by lower economic activity in China due to the Winter Olympics and growing COVID-19 restrictions later in the quarter.”
As MRC reported before, earlier this month, PPG announced that it has completed its acquisition of the powder coatings manufacturing business of Arsonsisi, an industrial coatings company based in Milan, Italy. Financial terms were not disclosed. The transaction will provide PPG with a highly automated, small- and large-batch capable, powder manufacturing plant in Verbania, Italy. PPG will also now have metallic bonding capabilities in the Europe, Middle East and Africa (EMEA) region. In 2021, the Arsonsisi powder business had sales of approximately USD15 million.
We remind that in June 2021, PPG announced an expansion of its coatings manufacturing capacity in Europe for packaging applications. The investments at sites in The Netherlands and Poland will support growing customer demand in the region for the latest generation of coatings for aluminum and steel cans used in packaging for beverage, food and personal care items. The projects include a further expansion of the company’s location in Tiel, The Netherlands, which will increase the plant’s production capacity for PPG INNOVEL non-BPA internal coatings for beverage cans by 30%. Expected to be completed in the first quarter of 2022, the project follows a 50% expansion completed at the end of 2020.
PPG is a leading supplier of powder coatings to the automotive, transportation, appliance, furniture and other markets. The company expanded the business with its 2020 acquisition of Alpha Coating Technologies, which manufactures powder coatings for light industrial applications and heat-sensitive substrates, and its 2021 acquisition of Worwag, which makes liquid, powder and film coatings for industrial and automotive applications. PPG recently agreed to acquire the powder coatings business of Arsonsisi, including a manufacturing plant in Verbania, Italy.