) recorded adjusted earnings from continuing operations
(excluding acquisition-related expenses of $4 million or 3 cents
per share) of $1.81 a share for fourth-quarter 2013, up 45% year
over year from $1.25 per share reported in the year-ago quarter.
The results exceeded the Zacks Consensus Estimate of $1.73 per
The company has delivered 14 straight quarters of record
adjusted earnings (including the fourth quarter), fueled by a
strong coatings portfolio, broad global footprint, prudent cash
deployment and measurable results from the strategic actions.
Profit from continued operation (as reported) was $254 million
or $1.78 per share in the fourth quarter, surging roughly 33%
from $191 million or $1.23 per share posted in the prior-year
quarter. Healthy results in the fourth quarter were also backed
by continuing operating and cost discipline coupled with a higher
level of organic sales growth.
Revenues rose 14% year over year to $3,702 million in the
quarter from $3,243 million in the year-ago quarter. It was also
ahead of the Zacks Consensus Estimate of $3,698 million. The
year-over-year rise is attributable to higher industry demand in
aerospace and automotive OEM coatings. The results were also
aided by stabilizing regional demand in Europe.
For full-year 2013, adjusted earnings from continued
operations was $8.28 per share (excluding acquisition-related
expenses), up 29% year over year from $6.44 per share recorded in
2012. The results topped the Zacks Consensus Estimate of $8.20.
Profit from continued operation (as reported), totaled $1 billion
or $7.13 per share versus $726 million or $4.69 a share in
For full-year 2013, revenues increased 12% to $15.1 billion
from $13.5 billion in 2012, in line with the Zacks Consensus
Revenues from the Performance Coatings division shot up 25%
year over year to $1.4 billion in the quarter as gains from
acquisitions more than offset a decline in volumes. The company
saw higher sales across aerospace, automotive refinish and North
American architectural coatings businesses.
Sales from the Industrial Coatings segment moved up 10% to
$1.2 billion on the back of volume gains in the automotive OEM
coatings business and contributions from acquisitions. Volume
rose across all regions.
Revenues from the Architectural Coatings (Europe, Middle East
and Africa) division edged up 0.2% to $466 million as positive
currency impact was offset by lower volumes. Despite lower
volumes, the segment earnings were higher than the prior year
quarter due to lower costs, including benefits from completed
restructuring actions and ongoing discretionary cost
Optical and Specialty Materials sales rose 14% to $309 million
in the quarter on improved optical products volumes and higher
silicas sales on strong demand.
Sales from the Glass segment rose roughly 9.5% to $264 million
on improved volumes for both fiber and flat glass and better flat
PPG Industries ended 2013 with cash and cash equivalents of
$1,116 million, down around 15% from $1,306 million recorded a
year ago. Long-term debt was $3,372 million as of Dec 31, 2013,
compared with $3,368 million as of Dec 31, 2012.
Moving ahead, PPG Industries envisions growth to remain
broadest in the U.S. with healthy trends across several coatings
end-use markets. The company expects measured growth in the
European region in 2014, which represents about one-third of its
The company is ahead of schedule on achieving targeted
acquisition-related cost synergies relating to the North American
architectural coatings acquisition. It is focused on achieving
the remaining synergies of the restructuring program approved in
the third quarter 2013.
PPG Industries expects incremental cost savings to be between
$75 million and $90 million in 2014. It also expects to deploy
between $3 billion and $4 billion of cash in a disciplined manner
on incremental earnings-growth initiatives over the next 18 to 24
PPG Industries, a Zacks Rank #2 (Buy) stock, has a diversified
base of products and markets, and looks to grow its businesses
strategically along with controlling costs. However, the company
remains challenged by a weak European market.
Other chemical companies with favorable Zacks Rank are
L'Air Liquide SA
Johnson Matthey plc
LyondellBasell Industries NV
). While both L'Air Liquide and Johnson Matthey hold a Zacks Rank
#1 (Strong Buy), LyondellBasell retains a Zacks Rank #2
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PPG INDS INC (PPG): Free Stock Analysis
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