PPG Industries (NYSE:PPG) today reported third quarter 2012 net sales of $3.8 billion. Net income for the quarter was $339 million, or $2.18 per diluted share, including nonrecurring charges. Adjusted net income for the quarter, excluding the nonrecurring charges, was $348 million, or $2.24 per diluted share. Third quarter 2011 net sales were $3.8 billion, and net income was $311 million, or $1.96 per diluted share. Third quarter 2012 results included after-tax charges of $9 million, or 6 cents per diluted share, for costs directly related to the company’s previously announced agreement to separate its commodity chemicals business and merge it with Georgia Gulf Corporation or a subsidiary of Georgia Gulf. The company anticipates additional separation costs in the fourth quarter. There were no nonrecurring charges in the third quarter 2011. A Regulation G Reconciliation of third quarter 2012 adjusted net income and earnings per diluted share to reported net income and earnings per diluted share is included below. “We delivered record third quarter earnings per share despite uneven demand among regions and end-use markets,” said Charles E. Bunch, PPG chairman and CEO. “Our coatings segments drove the record performance on improved local currency sales and 20 percent earnings growth. “North American sales activity remained strongest, highlighted by excellent automotive OEM (original equipment manufacturer) and refinish coatings growth,” Bunch noted. “Business levels in Asia and Latin America were flat in aggregate but mixed by end-use market, including growth in our automotive OEM and packaging coatings businesses that was offset by weakening coatings demand due to lower marine new builds. European volume remained below the prior-year quarter, but the trend improved notably in comparison with second quarter year-over-year results due to less customer inventory destocking. Sales declined in our Optical and Specialty Materials segment in all regions due to customer inventory management actions stemming from lower growth rates in the optical channel and in anticipation of the upcoming introduction of our next-generation TRANSITIONS(R) lenses.”
Jefferies analysts note that recent construction spending data indicates a cycle rotation away from construction-exposed names and toward industrial- and durable goods-levered firms could be playing out.