PPG Industries has reported that its glass segment sales were $256 million for the first quarter of 2013, matching the prior year’s sales for the same quarter. Company officials say higher flat glass volumes were more than offset by lower fiberglass pricing, resulting from reduced demand.
For the glass segment, the company reports earnings of $5 million for the quarter, down $3 million from the prior year-quarter, due to lower fiber glass pricing, reduced equity earnings and the negative impact of inflation, including higher natural gas costs, which officials say offset strong manufacturing cost improvements.
During a call with investors this afternoon, company officials also said that they are seeing signs of improvement in the commercial construction market and pointed to the flat glass business as a leading indicator of this improvement.
“The business unit that has the clearest indicator of commercial construction activity is the flat glass business,” said CEO Charles Bunch in response to a question from an investor. “There we’ve seen early signs that we are improving in U.S. commercial construction. If you look at the Architectural Billings Index, that’s up slightly. It’s still lagging what we’re seeing in residential, but we think it’s coming. We think commercial construction is building. It was the last to go and went down probably two years later than residential … but we’re seeing early signs of improvement.”
Overall, the company reports first-quarter net sales of $3.3 billion, also equal with the prior year. First-quarter 2013 adjusted net income from continuing operations, excluding nonrecurring charges was $235 million, compared with $216 million from the same period last year—an 8.1 percent drop.
“During the quarter, we delivered strong performance in our coatings portfolio, as we grew aggregate coatings segment earnings by 13 percent versus last year’s record level,” says Bunch. “We continued to experience notable demand divergence among the major regional economies, with activity generally strong in North America, broad growth improvement in Asia and persistent weakness in Europe.
“Looking to the second quarter, we anticipate positive momentum in the United States and Asia to continue, while conditions in Europe remain challenging with limited prospects for near-term improvement,” Bunch added. “We expect our earnings growth trend will continue based on our geographic and end-use market diversity, additional cost improvements from our restructuring program, and continued aggressive management of our businesses which is a hallmark of PPG. Finally, we are working to capitalize on our strong balance sheet as we continue to analyze opportunities to increase earnings though prudent cash deployment.”