) continues its impressive positive surprise streak as its
first-quarter 2012 adjusted earnings of $1.81 a share topped the
Zacks Consensus Estimate by a couple of cents. The adjusted
earnings exclude one-time charges associated with restructuring,
environmental remediation and acquisitions.
However, profit (as reported) tumbled 94% year over year to $13
million or 8 cents a share, hurt by the hefty one-time charges. The
Pennsylvania-based company reported profit of $228 million or $1.40
a share a year ago.
Revenues rose 6% year over year to $3,752 million, also beating
the Zacks Consensus Estimate of $3,696 million. PPG Industries saw
growth in each of its coatings businesses in the quarter. The
company's results were aided by strong domestic demand and growth
across emerging markets, offset by softness in Europe.
Revenues from the Performance Coatings division jumped 9% year
over year to roughly $1.2 billion, backed by higher volume and
better selling prices. The company said that its aerospace business
registered mid-teen growth in the quarter while architectural
coatings revenues soared 20%. Automotive refinish and marine
coatings results were healthy. Segment income improved $21 million
year over year to $160 million on the back of higher sales which
offset increased costs and raw material inflation.
Industrial Coatings sales climbed 5% year over year to $1.1
billion. Sales volumes in the U.S. grew over 10% in the
quarter driven by strong performance of automotive OEM coatings
business. Emerging markets registered growth in volume while Europe
witnessed a decline. Segment earnings rose $34 million year over
year to $150 million, supported by volume and price gains coupled
with aggressive cost management.
Revenues from Architectural Coatings (Europe, Middle East and
Africa) spiked 10% to $517 million, powered by the acquisition of
Denmark-based coatings company Dyrup. Segment income increased by
$4 million year over year to $16 million as lower volume was masked
by the company's cost-cutting measures.
Optical and Specialty Materials sales rose 8% to a record $334
million in the quarter. Segment income rose $19 million year over
year to $109 million on the heels of higher volumes.
Revenues from the Commodity Chemicals segment were essentially
flat year over year at $419 million as lower volume offset higher
pricing and revenues from Equa-Chlor acquisition. Segment income
increased by $3 million year over year to $100 million.
Sales from the Glass segment edged down 1% to $256 million.
Segment Income fell $18 million year over year to $8 million in the
reported quarter. The results were impacted by lower pricing.
The company ended the quarter with cash and cash equivalents and
short-term investments of roughly $1 billion, down 25% year over
year. Total debt decreased 11% year over year to around $3.7
Under its cash back strategy, the company returned $90 million
to its shareholders in the form of dividends and repurchased 1
million shares worth nearly $100 million.
Moving ahead, the company expects domestic growth in
second-quarter 2012 to be similar to the first quarter and expects
accelerated growth in emerging markets, buoyed by increased
industrial activity in China. However, it feels that the European
market will continue to remain under pressure. The company
said that it has initiated restructuring measures, especially in
its European operation, which is expected to fetch cost savings of
20-25 cents in the back half of 2012.
We currently have a long-term Neutral recommendation on PPG
Industries. The company, which competes with
EI DuPont de Nemours & Co.
) and BASF Coatings AG, currently holds a short-term Zacks #1 Rank
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