PPG Industries Inc.
) posted net income of $216 million or $1.39 per share for the
fourth quarter of 2011 compared with $205 million or $1.24 per
share in the year-ago quarter. The results substantially exceeded
the Zacks Consensus Estimate of $1.28 per share.
For the fiscal year 2011, PPG's net income was $1.1 billion, or
$6.87 per share, exceeding the Zacks Consensus Estimate of $6.78
The company delivered record earnings in the quarter driven by
higher revenues and cost cutting strategies.
Revenues in the quarter went up 4% to $3.52 billion, slightly
exceeding the Zacks Consensus Estimate of $3.50 billion. For
full-year 2011, revenues increased 11% to $14.89 billion from the
Revenues in the
segment were $1.1 billion in the fourth quarter, an increase of $34
million from year-ago quarter. The segment income decreased by $30
million over the prior-year quarter to $140 million, driven by
lower activity levels and inflationary pressures. Disappointing
results in the marine and architectural coatings segments also
contributed to the decrease in income. PPG increased pricing in
Segment sales volumes declined in the Automotive refinish
business. Volumes in the U.S architectural coatings business
remained flat versus the year-ago quarter whereas in the emerging
markets sales volumes of the architectural coatings declined.
Marine business also witnessed a decline in sales volumes due to
reduced shipbuilding activity. Overall sales volumes inched down 2%
compared with the prior-year quarter.
recorded revenues of $1.0 billion, an increase of 7% versus $949
million in the prior-year quarter. Sales volumes grew 4% in
the quarter based on continued growth end-use markets growth and
increased global auto builds. Segment earnings for the quarter were
$106 million, an increase of $27 million from the prior-year,
driven by volume and price gains coupled with aggressive cost
management due to raw material inflation.
Architectural Coatings (Europe, Middle East and
posted revenues of $449 million, up 5% from last year's $426
million. The increase in revenues was offset by negative foreign
currency translation. The segment income increased by $6 million
year-over-year to $8 million due to higher volumes.
Optical and Specialty Materials
revenues were $259 million, down 3% from the year-ago quarter.
Floods in Thailand impacted the optical products, and led to the
disruption in the supply chains, which in turn, led to lower
volumes. It also negatively impacted the segment income in the
quarter, which fell by $4 million year over year to $53
Commodity Chemicals segment
reported a 0.5% increase in revenues to $398 million, led by
improved pricing offset by a decrease in volumes resulting from
lower chlorine industry demand and customer inventory management
actions. Segment income decreased by $10 million year over
year to $63 million.
Revenues in the
were $256 million compared with $258 million in the prior-year
period. Income was $19 million in the reported quarter a decline
from the year-ago income of $29 million primarily due to lower
volumes, lower capacity utilization, and lower licensing and equity
PPG Industries had cash and cash equivalents of approximately
$1.5 billion as of December 31, 2011 compared with $1.3 billion as
of December 31, 2010. By way of its cash back strategy the
company has returned $1.2 billion, or 85% of cash flow from
operations in 2011, to shareholders in the form of dividends and
share repurchases during 2011.
PPG expects its first quarter results of 2012 to be similar to
the fourth quarter of 2011 and believes that the European market
will continue to remain a challenge for the company. However, the
company expects the U.S. economy to recover moderately. PPG expects
to increase the product prices going forward while benefiting from
lower costs of natural gas.
The company expects emerging markets to witness higher growth
rates compared with its developed markets. However, the growth in
the emerging markets is expected to be more moderate and
PPG has a strong cash position, and it continues to continue to
utilize cash on earnings growth initiatives. The company has also
returned cash to its shareholders in the form of uninterrupted
dividend pay outs. It also expects to deploy its strong cash
position for continuous growth and aims to end 2012 with a cash
balance of less than $1 billion.
However, raw material costs have been a matter of concern for
PPG's earnings. Though the raw material costs have shown a
moderating trend, the price of its primary raw material titanium
dioxide (TiO2) has been escalating. Besides, PPG faces stiff
competition from the DuPont Performance Coatings segment of
EI DuPont de Nemours & Co.
) and BASF Coatings AG.
Therefore the company maintains a Zacks #3 Rank on its
shares which implies a Hold rating for the short term (1 to 3
months) and we reiterate our Neutral recommendation on the stock
for long term (more than 6 months).
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