Looking ahead, Bunch said, “We anticipate solid global growth to continue, but it will not be uniform across geographies or end-use markets. PPG remains well-positioned with a balanced coatings portfolio, both regionally and by end-use market, providing broad growth opportunities while minimizing the impact of any individual fluctuations. Additionally, we have a stronger cash position, which we intend to deploy in a timely, disciplined manner with a continued focus on earnings-accretive cash uses, including additional acquisitions and share repurchases.”
The company today reported cash and short-term investments totaling $3.0 billion at quarter-end, including $1.735 billion of gross proceeds received from recent business divestitures. The company also noted that it repurchased $200 million, or 1.1 million shares, of PPG stock during the quarter.
PPG Reportable Segments and Discontinued Operations Classification
On March 31, PPG divested its 51-percent ownership interest in the Transitions Optical joint venture and 100 percent of its sunlens business. The financial results for the divested businesses are reported in discontinued operations. Additionally, as of the first quarter 2014, PPG has adopted a new reportable-segment structure. The three reportable segments and respective businesses for each are as follows:
- Performance Coatings – aerospace, architectural coatings – Americas and Asia-Pacific, architectural coatings – Europe, Middle East and Africa (EMEA), automotive refinish, and protective and marine coatings
- Industrial Coatings – automotive OEM (original equipment manufacturer) coatings, industrial coatings, packaging coatings, and specialty coatings and materials
- Glass – fiber glass and flat glass
- Performance Coatings segment net sales for the quarter were $2.0 billion, up $429 million, or 27 percent. Acquired businesses increased sales by 23 percent year-over-year, and segment volume growth added 3 percent, with currency translation and price accounting for the remaining net sales change. Automotive refinish and aerospace increased sales volumes in all major regions, reflecting continued global industry growth. Excluding favorable acquisition impacts, architectural coatings net sales in North America grew modestly versus the prior year, as results were mixed by distribution channel and the region was impacted by inclement weather. Architectural coatings – EMEA volumes were up mid-single-digit percentages due to partial regional demand recovery and favorable weather conditions in the region. Protective coatings volume growth, including acquisition-related revenue synergies, offset weaker marine coatings sales, as marine new-build demand remained negative year-over-year but stable versus recent quarters. Segment earnings of $248 million were up $56 million, or 29 percent, as a result of the increase in organic net sales and earnings contribution from business acquisitions.
- Industrial Coatings segment net sales for the quarter were $1.4 billion, increasing $89 million, or 7 percent. Volume growth of 7 percent accounted for the net sales change, with all regions delivering higher volumes. Automotive OEM coatings grew by more than 10 percent globally, outpacing a global industry growth rate of about 4 percent, with strong growth in each major region. The industrial coatings and specialty coatings and materials businesses also delivered solid volume growth, led by gains in North America and the Asia Pacific region. Packaging coatings sales were weaker, driven by lower European volume. Total segment earnings for the quarter were $231 million, up $33 million, or 17 percent, as a result of the higher volumes.
- Glass segment net sales were $266 million for the quarter, up $10 million, or 4 percent, year-over-year. Segment volumes grew 3 percent on continued improvement in global fiber glass demand, partly offset by lower flat glass volumes. Flat glass pricing increased year-over-year. Segment earnings were $4 million, down $1 million versus the prior year primarily due to scheduled maintenance and repair costs of $12 million and higher natural gas costs that were partly offset by improved earnings from the higher net sales.