PPG paint product prices continue to rise

PPG Industries Inc. on Thursday released better-than-market-expected fourth-quarter 2017 results, the company's stock price jumped higher on the day, once up more than 6.6%, hitting a new high of nearly 2 years, closing slightly down, closing at $118.41 per share, up 3.8% for the day, the largest single-day gain in recent memory.

  According to the company, the increase was due to "steady and balanced growth" in sales in all major regions of the world, and PPG's average sales price for coatings products increased for the third consecutive quarter, keeping margins up - although raw material costs were higher than expected in the fourth quarter. Although raw material costs were higher than expected in the fourth quarter. The company attributed the higher-than-expected increase in raw material prices to ongoing supply issues, including production declines due to environmental enforcement in China.

  For the full year 2017, PPG's net sales from continuing operations were approximately $14.8 billion, up more than 3 percent from the prior year, with favorable currency exchange rates boosting results by nearly 1 percent, or approximately $55 million; sales volumes were up 1.5 percent compared to the prior year, with growth driven by acquisition revenue of more than 1 percent. Full-year net income from continuing operations was $1,408 million, up 157.4% from 2016 results, but adjusted full-year net income was $1,513 million, up only about 0.5% year-over-year, mainly because of a non-recurring gain of nearly $300 million in 2016 due to business restructuring and one-time compensation for asbestos issues, while the pension settlement gain for the year was up to $600 more than US$100 million.



 In the fourth quarter of 2017, PPG's net sales of approximately $3.7 billion were up nearly 8 percent from the prior-year period, with sales volumes up 3 percent year-over-year and sales prices increasing sequentially for the third consecutive quarter, with the resulting sales increase of nearly 1 percent; favorable currency exchange rates drove sales higher by 3 percentage points, or approximately $115 million; and acquisition-related sales (net of divestitures) increased less than 1 percent .

  For the fourth quarter, PPG Performance Coatings business unit net sales were $2.1 billion, up $144 million, or more than 7 percent, from the prior year. Higher sales were driven by higher sales prices in most businesses and geographies, volume growth of more than 2 percent and favorable currency exchange rates that pulled net sales up approximately $67 million (or 3 percent).

  Automotive refinish performed strongly in Europe and the U.S., with mid-single-digit sales volume growth driven by strong demand in emerging markets. Aerospace coatings sales growth accelerated to mid-single digit sales volume growth as market demand grew in the U.S. and Asia. The Americas and Asia Pacific achieved low to mid-single-digit year-over-year sales growth in architectural coatings, which varied by channel and region. In the U.S. and Canada, sales at company-owned architectural coatings retail stores grew steadily, while total sales to the DIY retail and independent dealer networks were flat year-over-year. Architectural coatings sales in Latin America were flat compared to the prior year, as growing end market demand was offset by the negative impact of the Mexico earthquake. While EMEA architectural coatings sales were flat versus the prior year and improved versus the third quarter, results remained mixed across countries. Overall, protective coatings and marine coatings sales were flat year-over-year, with growth in protective coatings sales offsetting the impact of lower marine coatings sales.

  PPG's Industrial Coatings business unit reported fourth quarter net sales of approximately $1.6 billion, up $121 million, or more than 8 percent, from the prior year quarter. Sales volume increased more than 4 percent, with favorable currency exchange rates driving growth of nearly $46 million, or about 3 percent. Sales prices declined slightly year-over-year but improved from the third quarter, and acquisition-related sales increased $27 million, or about 2 percent year-over-year.

  Automotive OEM coatings sales grew in the low single digits year-over-year, in line with the global automotive industry. The company achieved mid-single-digit year-over-year sales growth in industrial coatings and specialty coatings and materials, and outpaced the global average industrial production growth rate for the eighth consecutive quarter, with the company achieving better growth in many end markets. Packaging coatings sales grew in the high single digits year-over-year, with sales growth above the industry average in most regions as customers switched to PPG's new technology products.