PPG 2015 Third Quarter Net Sales Increase 6%; Glass Segment Essentially Flat
PPG Industries recently reported third quarter 2015 net sales from continuing operations of $3.87 billion, vs. the prior-year figure of $3.94 billion. Net sales in local currencies increased by 6%, or approximately $250 million, year-over-year, which included a 7% contribution from acquisition-related sales offset by lower sales volume of less than 1%. Unfavorable foreign currency translation reduced year-over-year net sales by about 8%, or about $310 million.
Third quarter 2015 reported net income from continuing operations was $433 million, and adjusted net income from continuing operations was $439 million, establishing a new third quarter record for the company. Net income from continuing operations for the third quarter 2015 includes after-tax charges for pension windups and transaction-related costs totaling $6 million.
“We have continued to deliver strong year-over-year growth in adjusted earnings per share, with results up 14%,” said Michael H. McGarry, president and CEO. “Our third quarter performance was achieved despite the impact of unfavorable foreign currency translation, which was more than offset by the continued benefit of our acquisitions, including consistently strong performance of Comex, ongoing and aggressive cost-management actions and continued cash deployment.”
At the end of the third quarter, PPG reported approximately $1.4 billion of cash and short-term investments, down from $3.0 billion in the prior-year quarter due to cash-deployment actions. During the quarter, the company repurchased about $150 million, or about 1.5 million shares, of PPG stock. Year-to-date, the company has repurchased about $500 million in PPG stock, in comparison with a 2014 year-to-date figure of $450 million. PPG has approximately $1.2 billion remaining of its current share-repurchase authorization, which was approved in 2014.
Glass segment net sales were $278 million for the quarter, down $5 million, or 2% over last year. Improved pricing in both glass businesses was offset by the impact of unfavorable foreign currency translation, which affected net sales by about $10 million. Segment sales volumes improved by a low-single-digit percentage year-over-year, driven by growing North American fiber glass demand that was offset by the absence of sales stemming from the divestiture of a flat glass facility in 2014. Segment income was $32 million, down $1 million from the prior year as favorable pricing was offset by facility-outage-related costs, higher year-over-year pension expense and $5 million of unfavorable foreign currency. In local currencies, segment income grew 12% year-over-year.
“Looking ahead, we anticipate a resumption of volume growth in our fourth quarter supported by continued global economic expansion, the absence of customer destocking and the benefit of including Comex in our organic growth figures following the acquisition’s anniversary,” said McGarry. “Additionally, we continue to have a variety of PPG-specific earnings drivers that are not directly tied to the pace of the economy. These include the benefits of our previously announced restructuring actions, the attainment of remaining synergies from the ongoing integration of our acquisitions, and the ongoing effects of our continued cash deployment. Also, as we have done at PPG for many years, we will continue to proactively manage our cost structure to meet current demand trends. Further, based on current foreign exchange rates and our business seasonality, we expect the negative impact of foreign currency translation will begin to moderate somewhat in the fourth quarter.”
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