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PPG narrowly beats estimates on strength in automotive, packaging coatings

January 25/2021

MOSCOW (MRC) -- PPG Industries today reported fourth-quarter net income down 7% year-on-year (YOY), to USD272 million, on net sales up 2%, to USD3.76 billion. Adjusted earnings, which exclude some impairment charges, totaled USD1.59/share, up 21% YOY and slightly ahead of analysts’ consensus estimate of USD1.58/share, according to Chemweek with reference to Refinitiv (New York, New York).

Sales volumes were down 1.5% YOY, but this was offset by a 1.5% increase in selling prices, favorable exchange rates, and acquisitions.

“The more than 20% increase in our adjusted EPS (earnings per share) was the result of strengthening year-over-year sales growth in our industrial coatings reportable segment, led by the automotive original equipment manufacturer (OEM), general industrial, and packaging coatings businesses,” says PPG chairman and CEO Michael McGarry. “In addition, the global architectural coatings business continued its excellent execution as we leveraged higher year-over-year sales into strong earnings growth. Consistent with the third quarter, we achieved improved operating results despite continued weakness in several key end-use markets, including aerospace and automotive refinish coatings, which are still being heavily impacted by the ongoing pandemic.”

Performance coatings segment sales declined 1% YOY, to US2.2 billion, while segment income was down 3%, to USD8 million. Volumes fell 6% YOY, while selling prices were up 3%. The declines were mostly due to a 30% drop in sales for aerospace coatings, and smaller declines in protective and marine and automotive refinish coatings. However, architectural coatings sales grew YOY, and automotive refinish coatings sales increased on a sequential basis.

Industrial coatings segment sales grew 7% YOY, to USD1.6 billion, while segment income was up 40%, to USD282 million. Sales volumes grew in the automotive OEM, industrial coatings, and packaging coatings businesses. Automotive OEM sales growth differed by region, with particularly large increases in China.

For the year ahead, PPG expects “overall global coatings demand continues to improve in many of the end-use markets we serve and across all our major regions, and we expect overall global economic activity to strengthen in the first half of 2021,” McGarry says. “However, due to increasing pandemic-related restrictions and certain supply chain disruptions, there is uncertainty regarding when this coatings demand growth will fully materialize.”

The company cut costs by about USD115 million in full-year 2020, a result of restructuring programs put in place partly in response to the pandemic. PPG generated about USD2.1 billion in cash during 2020, McGarry says.

As MRC informed before, the board of Tikkurila (Helsinki, Finland) says it “unanimously recommends” that the company’s shareholders accept a planned tender offer for the company from PPG Industries. PPG’s offer will be at EUR27.75/share, valuing Tikkurila at about EUR1.24 billion (USD1.50 billion), after PPG raised its bid price on 5 January in response to a competing offer from an unspecified company. The Tikkurila board says in a statement that its assessment of PPG’s revised bid took the rival offer into consideration.

We remind that in February 2020, PPG said it had completed its acquisition of Industria Chimica Reggiana (ICR, Reggio Emilia, Italy), a maker of automotive refinish products. Financial terms of the deal, including purchase price, were not disclosed. The deal was announced on 8 January. ICR was founded in 1961 and employs about 180 people. ICR manufactures automotive refinish products, including putties, primers, basecoats and clear coats. It also makes a range of coatings, enamels and primers for light commercial vehicles and other light industrial coatings applications. ICR employs about 180 people and sells its products in more than 70 countries in Europe, Africa, the Middle East, the US and Latin America.

We also remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% year on year, 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-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1%  year on year.
Author:Margaret Volkova
Tags:Europe, propylene, ethylene, coatings, car components, packaging, PPG, Tikkurila, Russia, USA.
Category:General News
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