PPG Industries (NYSE:PPG) today reported fourth quarter 2012 net sales of $3.6 billion. Net income for the quarter was $227 million, or $1.46 per diluted share, including nonrecurring charges. Adjusted net income for the quarter, excluding the nonrecurring charges, was $238 million, or $1.53 per diluted share. Fourth quarter 2011 net sales were $3.5 billion, and net income was $216 million, or $1.39 per diluted share. PPG’s annual sales for 2012 were $15.2 billion, an increase of 2 percent versus 2011 sales of $14.9 billion. The company’s full year 2012 net income was $941 million, or $6.06 per diluted share, versus 2011 net income of $1.1 billion, or $6.87 per diluted share. Full year 2012 adjusted net income was $1.2 billion, or $7.94 per diluted share. The company’s full year tax rate on ongoing earnings was 25 percent in 2012 and 2011. Fourth quarter 2012 net income includes after-tax charges of $11 million, or 7 cents per diluted share, for acquisition-related costs and costs directly related to the separation of the commodity chemicals business and merger with a subsidiary of Georgia Gulf Corporation. The company anticipates additional acquisition- and separation-related costs in the first quarter 2013. There were no nonrecurring charges in last year’s fourth quarter or full year 2011. The 2011 results included a favorable catch-up impact from a fourth quarter adjustment of the full year 2011 tax rate from 26 percent to 25 percent and from a favorable tax audit settlement. A Regulation G Reconciliation of fourth quarter and full year 2012 adjusted net income and earnings per diluted share to reported net income and earnings per diluted share is included below. “Our record fourth quarter results capped off an exceptional year for the company, driven by excellent operating performance and several significant strategic actions that have accelerated the pace of our portfolio transformation,” said Charles E. Bunch, PPG chairman and CEO. “During the quarter, as we did during the first nine months, we grew our sales and earnings despite moderate overall economic conditions that varied by region and end-use market, and continued negative impacts from currency translation.
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.