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PPG earnings rise on volume recovery

October 20/2020

MOSCOW (MRC) -- PPG Industries reported third-quarter net income from continuing operations up 21% year-on-year (YOY), to $442 million, on sales down 4%, to USD3.69 billion, said Chemweek.

Adjusted earnings totaled 1.93/share, slightly ahead of analysts consensus estimate of USD1.92/share, as reported by Refinitiv (New York, New York). Selling prices rose 1.3% YOY, but volumes fell on continuing negative impacts from the COVID-19 pandemic.

As reported earlier this month, we delivered record operating results in the third quarter, with both of our reportable business segments delivering higher segment income than the prior year, despite continued, negative pandemic-related economic effects, says Michael McGarry, PPG chairman and CEO. Strong year-over-year organic sales growth in global architectural coatings and continued cost management drove earnings growth in our performance coatings reporting segment. In addition, our leading technology and service capabilities benefited us as demand for automotive OEM coatings and general industrial coatings began recovering in the quarter, generating strong PPG operating leverage and boosting earnings in our industrial coatings reporting segment."

Performance coatings segment sales declined 3% YOY, USD2.25 billion, while segment income increased 12%, to USD426 million. Architectural coatings segment sales grew across the world, with the strongest increases in EMEA, where volumes rose by 10%. Volumes in aerospace coatings fell 35% YOY, however, due to lower commercial aerospace demand, and automotive refinish coatings volumes declined 10% YOY but increased sequentially.

Industrial coatings segment sales fell 5% YOY, to USD1.43 billion, while segment income was up 23%, to USD253 million. Segment volumes were down 5% YOY, but increased 40% sequentially as demand improved from the second-quarters trough. Volumes improved on a sequential basis in automotive OEM and industrial coatings, though volumes remained down on a YOY basis.

PPG expects fourth-quarter sales volumes to fall by a low-to-mid-single digit percentage, with differences by business line and region. Adjusted earnings for the fourth quarter are forecast to total USD1.501.57/share. Looking ahead, we are likely to experience normal seasonal trends in the fourth quarter, especially in our European and North American architectural coatings businesses, McGarry says. Even with the continued uncertainty from the pandemic we expect overall economic activity to continue to recover, but in an uneven manner."

We remind that Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year.

At the same time, August production of primary polymers rose to 888,000 tonnes against 838,000 tonnes in July due to increased capacity utilisation at ZapSibNeftekhim, Stavrolen and Gazprom neftekhim Salavat. Overall output of polymers in primary form totalled 6,630,000 tonnes over the stated period, up by 15.2%  year on year.
Author:Anna Larionova
Tags:pigmentniy krasitel, construction, paints and coatings, PPG.
Category:General News
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