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Axalta easily beats estimates on cost cuts despite lower YOY demand

October 22/2020

MOSCOW (MRC) -- Axalta reported third-quarter net income up 26.0% year-on-year (YOY), to USD82.5 million, on net sales down 7.2%, to USD1.03 billion, said Chemweek.

Adjusted earnings totaled 59 cents/share, up 13.5% YOY and easily beating analysts consensus estimate of 33 cents/share, as reported by Refinitiv (New York, New York). The decline in sales was driven by a 6.0% YOY drop in volumes, and 1.4% lower average price and product mix.

Sales grew 57.2% sequentially, indicating a solid rebound from the pandemic-induced shutdowns in the second quarter. Lower volumes across all end-markets were driven by ongoing COVID-19 related macroeconomic impacts, though volumes improved considerably through the quarter and exceeded earlier expectations due to faster recovery pacing in key end-markets, Axalta says.

"Although economic impacts from the coronavirus pandemic persisted across our business in the period, we [saw] rapidly improving demand, and the effectiveness of our cost management programs has continued to help offset volume impacts, says Axalta chairman and CEO Robert Bryant. Cost cuts helped boost operating earnings, Bryant adds.

Performance coatings segment sales fell 5.7% YOY, to USD682.7 million, while segment adjusted EBIT grew 7.2%, to USD133.9 million. Volumes fell 4.5% YOY, mainly due to the automotive refinish business, with industrial volumes flat. Lower operating and variable drove profits higher.

Transportation coatings segment sales declined 10.2% YOY, to USD344.2 million, while segment adjusted EBIT was up 30.4%, to USD48.5 million. Volumes fell 9.0% YOY, mainly due to lower automotive production volumes. Lower operating and variable costs helped increase profits.

Axalta expects fourth-quarter 2020 sales to be down 6-8% YOY from 2019. For the full-year, sales are expected to be down by about 18% YOY.

As MRC informed earlier, Axalta Coating Systems Ltd. announced its financial results for the fourth quarter and full year ended Dec. 31, 2019. Net sales of USD1,098.4 million for the fourth quarter decreased 5.8 percent, including 1.3 percent negative foreign currency translation impact and a two percent impact from the sale of a consolidated Joint Venture interest in Q2 2019.

As MRC informed earlier, Axalta Coating Systems has completed its previously announced acquisition of the Spencer Coatings Group, a leading manufacturer of high performance industrial coatings for heavy-duty equipment, general industrial, oil and gas, and glass coatings segments.

As per MRC, 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 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.
Author:Anna Larionova
Tags:petroleum products, construction, petrochemistry, coatings, Axalta Coating Systems.
Category:General News
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