Axalta Coating Systems reported net sales of $1,126.8 million for its second quarter ended June 30, an increase of 72.6% year-on-year, primarily driven by 56.4% higher volumes and 9.3% higher average price and favourable product mix.
The company reported that volume growth across all end-markets was driven by ongoing recovery from pandemic-related macroeconomic impacts. Both price and product mix were positive in the period within Performance Coatings and included initial pricing offsets to the variable input inflation that intensified during Q2.
Mobility Coatings segment price and product mix was impacted by negative mix effects, offset by stable overall pricing versus the prior year quarter. Performance Coatings recorded a 67.1% net sales increase, including ongoing strong growth for the Industrial end-market and a continued recovery in Refinish end-market demand conditions. The 88.2% net sales increase for Mobility Coatings included the rebound from COVID-19-related vehicle production shut-downs in the prior year quarter, offset partly by ongoing volume impacts due to semiconductor chip shortages, primarily in Light Vehicle.
Refinish net sales increased 76.8% year-on-year to $463.1 million in Q2 with almost 50% volume increases, benefiting from continued global traffic recovery. Net sales increased 16.1% in Q2 sequentially versus Q1, including improvement in each month of the quarter. Volume within the Refinish business continued to increase sequentially, but volumes remain below 2019 levels for a pre-pandemic comparable period as congestion levels are still rebounding despite total net sales increasing versus the comparable period in 2019. Income from operations for Q2 2021 was $190.4 million versus a loss of $64.5 million in Q2 2020.
Robert W. Bryant, Axalta’s President and CEO, commented: “Axalta’s second quarter represented a strong rebound from the pandemic-impacted second quarter last year and was slightly better than our expectation set for the period communicated in our last earnings release. The company saw notable improvement across all businesses from the prior year period, including continued strong growth in Industrial coatings and solid sequential recovery in Refinish. While Mobility Coatings rebounded well from the prior year, the business has and will continue to see impact from the semiconductor chip shortages, primarily impacting Light Vehicle production globally.”
“Our team at Axalta remains focused on disciplined capital allocation. Following the acquisition of Anhui Shengran in China announced in March within our Energy Solutions business, we were very pleased to sign a definitive agreement to acquire U-POL in July,” Bryant noted. “This acquisition, which is expected to close in late Q3 or early Q4 of 2021, represents a clear and compelling strategic fit with our Refinish business. We believe that the U-POL business will generate strong returns and will also accelerate growth for our existing Refinish businesses given the expected commercial synergies in product offerings, distribution channels, and customer opportunities. We are also excited to be bringing onboard a terrific management team that has proven an ability to grow the business substantially during its tenure.”
Bryant concluded: “We remain focused on achieving offsets to the substantial variable cost inflation headwinds that accelerated across the business globally. Our strong price and product mix result showcases the ability of our people and our business to react quickly to shifting conditions. Given that the magnitude of such inflation headwinds has continued to increase through the period, we will continue to pursue offsets via price and productivity actions in order to maintain Axalta’s margins and anticipate this process to continue through the remainder of the year. Our adaptability remains a core strength of our business, witnessed last year with the pandemic volume impacts and this year as we adjust dynamically to rising input costs and tight supply availability.”