Protective and decorative coatings company PPG Industries Inc. (PPG) Thursday reported a surge in profit for the first quarter, even as sales remained flat, helped by a large nonrecurring gain from commodity chemicals business separation. PPG's directors today approved an increase in dividend.
Charles Bunch, PPG chairman and CEO, said, ''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."
The firm noted that it saw notable demand divergence among the major regional economies. While activity was generally strong in North America, Asia saw broad growth improvement and Europe witnessed persistent weakness.
Despite these differences, the coatings earnings grew in each major region, aided by cost-management actions and the continued strength of several end-use markets, including automotive OEM, aerospace and U.S. construction.
Net income attributable to the company surged to $2.410 billion from last year's $13 million. Earnings per share increased to $16.31 from $0.08.
Adjusted earnings were $16.41 per share compared to $1.81 per share last year.
On average, 17 analysts polled by Thomson Reuters expected earnings of $1.54 per share for the quarter. Analysts' estimates typically exclude special items.
The company completed the separation of its commodity chemicals business and subsequent merger with a subsidiary of Georgia Gulf Corporation into a combined company named Axiall Corp. Current year and prior year results for the former Commodity Chemicals segment and a net gain on the separation transaction have been reported as discontinued operations.
Income from continuing operations was $219 million or $1.48 per share compared to a loss of $50 million or $0.32 per share last year.
Net sales were flat with last year at $3.33 billion. Analysts expected revenues of $3.44 billion.
Performance Coatings segment sales slid 2 percent to $1.1 billion, as volumes declined 5 percent and were partly offset by sales gains from acquisitions held for less than one year and pricing.
Industrial Coatings segment sales climbed 10 percent to $1.2 billion on higher volumes and acquisitions.
Sales fell in the Optical and Specialty Materials segment on weaker consumer demand in the U.S., which was partly offset by volume growth from a strong new product introduction in Europe in February. Glass segment sales matched with the prior year.
Looking ahead to the second quarter, Bunch expects positive momentum in the U.S. and Asia to continue, while conditions in Europe remain challenging with limited prospects for near-term improvement.
''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,'' he added.
The company's directors today approved a 2 cents per share increase in the company's dividend, declaring a regular quarterly dividend of 61 cents per share, payable June 12 to shareholders of record May 10.
PPG closed at $132.40 on Wednesday. The stock is advancing 1.4 percent in pre-market trading.
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