PPG reported first quarter 2018 net sales of about $US3.8 billion, up nearly 9 percent versus the prior year, aided by higher selling prices of almost 2 percent, volumes growth of less than one percent and favourable foreign currency translation of almost 6 percent. Acquisition-related sales, net of divestments, added less than 1 percent to sales growth.
First quarter 2018 reported net income from continuing operations was $347 million, an over 4 percent increase versus the first quarter 2017. The effective tax rate for the quarter was 23.5 percent.
“In the first quarter, selling price initiatives continued to gain momentum with increases across all regions that totalled almost 2 percent. This is our most significant sequential improvement since raw material inflation began approximately one-year ago and includes an almost 200 basis points of sequential improvement in the Industrial Coatings segment,” said Michael H. McGarry, PPG chairman and chief executive officer. “During the quarter, we experienced further raw material inflation and higher logistics costs across all our businesses. We are continuing to prioritize working with our customers to further offset the impact of inflation. These efforts, along with our continued focus on operational excellence are expected to aid our margin recovery efforts.”
“Finally, we repurchased $600 million of stock during the quarter as part of our continued focus on earnings-accretive cash deployment. Our pipeline for acquisitions remains active, and we continue our focus on maximizing long-term shareholder value. As we look ahead, we still expect continued positive momentum in overall economic growth, and we remain optimistic that our leading-edge technology products will continue to bring value to our customers,” McGarry concluded.
PPG’s Performance Coatings segment first quarter net sales were approximately $2.2 billion, up $148 million, or 7 percent, versus the prior year. Organic sales in local currencies increased nearly 2 percent, primarily due to higher selling prices, sales volumes were flat, partially due to fewer shipping days which negatively impacted the distribution businesses, and favourable foreign currency translation increased net sales by $119 million, or nearly 6 percent.
Automotive refinish coatings organic sales increased year-over-year by a mid-single-digit percentage driven by above-market performance in Europe and strong demand in the Asia-Pacific region. Automotive OEM coatings sales volumes were in-line with prior year and global industry automotive builds.
As its earnings release was being finalized, the company received a report through its internal reporting system concerning potential violations of PPG’s accounting policies and procedures regarding the failure to accrue certain specified expenses in the first quarter. Based on preliminary review, the company identified approximately $1.4 million of expense that should have been accrued in the first quarter, and the earnings reported in this release reflect the accrual of such $1.4 million of expenses.
This article courtesy of Russell Thrall III, publisher CollisionWeek. Check out their website at: www.collisionweek.com