Protective and decorative coatings company PPG Industries, Inc. (PPG) reported Thursday a sharp decline in first-quarter profit, reflecting certain non-recurring charges. However, adjusted earnings topped analysts' expectations, benefited by a 6 percent growth in net sales.
The company said it experienced strong growth in U.S. coatings sales helped by strengthening demand in the U.S., end-use markets and growth in emerging regions, which offset weaker European activity. PPG sees further growth opportunities as demand in some of its larger end-use markets continues to recover.
Charles Bunch, chairman and CEO of the company said, "PPG's earnings growth momentum continued during the first quarter, and we achieved a seventh consecutive quarter of record earnings with adjusted earnings per share up about 30 percent versus last year."
In the first quarter, net income attributable to the company plunged to $13 million or $0.08 per share from $228 million or $1.40 per share reported a year ago.
Results for the recent quarter included after-tax charges of $163 million or $1.06 per share for business restructuring, $99 million or 64 cents per share for environmental remediation charges, and $4 million or 3 cents per share for business acquisition-related costs.
Adjusted net income, excluding non-recurring charges, was $279 million or $1.81 per share. On average, 15 analysts polled by Thomson Reuters expected the company to earn $1.69 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter grew 6 percent to $3.75 billion from $3.53 billion a year ago. Analysts estimated revenues of $3.74 billion.
Looking ahead to the second quarter, which the company says its best sales quarter seasonally, it expects year-over-year growth rates in the U.S., to be similar to the first quarter coupled with lower regional natural gas input costs.
The company expects growth in emerging regions to accelerate, supported by higher Chinese industrial activity, while European demand is expected to remain muted. PPG added that it is now implementing restructuring actions focused mainly in this region, with anticipated cost savings of 20 to 25 cents per share in the second half of the year.
PPG is currently trading at $99.61, up $1.14 or 1.16 percent, on a volume of 419 thousand shares on the NYSE.
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