PPG enjoyed record third-quarter results, and the company has improved glass segment sales to thank in some small part for it.
The company’s glass segment netted $278 million for the quarter, an increase of $16 million year over year. Volumes grew modestly in both fiber glass and flat glass, reversing a negative trend from earlier in the year, while pricing also improved in flat glass. Segment earnings were $21 million, a decrease of $3 million from the prior-year quarter. The positive earnings impact from improved sales was offset by reduced equity and international licensing earnings and the negative impact of inflation, including higher transportation and natural gas unit costs.
Thursday’s release of PPG’s latest financial figures showed the company’s net sales had increased 17 percent from the same time last year to $4 billion, resulting in a net profit of $220 million from continuing operations. The company reported year-to-date cash from continuing operations of about $1.3 billion, approximately 25 percent ahead of the prior-year total. In addition, cash and short-term investments totaled about $2.2 billion as of September 30, 2013, up from $2.0 billion at the end of the third quarter 2012.
“We continued to deliver record financial performance in the third quarter as positive impacts from our cash deployment and our strong operating focus were coupled with a broader improvement in market conditions,” says Charles E. Bunch, PPG’s chairman and CEO. “Aerospace and automotive OEM coatings remained PPG’s most consistent growth drivers, with many other businesses contributing to the overall sales and earnings growth.”
Chief among them was the performance within the company’s North American architectural coatings business PPG acquired from AkzoNobel in April that continued to improve, Bunch says. That transaction helped fuel PPG’s performance coatings segment net third-quarter sales jump 34 percent ($409 million) to $1.6 billion overall. North American architectural coatings net sales, excluding acquisitions, were up mid-single-digit percentages, reflecting consistently higher market demand, Bunch says. Segment earnings improved $49 million, or 24 percent, to $252 million as a result of acquired businesses’ earnings and lower costs that stemmed from business restructuring actions and ongoing cost management.
“Within the six months following the transaction closing,” Bunch says, “we already realized, on a run-rate basis, more than 50 percent of the targeted $200 million of acquisition synergies. While there remains considerable work ahead, I am pleased with the team’s excellent progress to date.”
PPG also enjoyed a healthy bounce in its industrial coatings segment, netting $1.2 billion in sales for the quarter. Bunch attributed the increase, which was roughly 10 percent higher than the prior year, to higher volumes and modest acquisition-related gains.
Bunch sounded equally as optimistic about the future, even though the fourth-quarter of the year is typically seasonally slower, especially in architectural coatings.
“We expect the U.S. economy will continue to grow in a measured manner supported by increasing demand in many markets we supply,” he says.