PPG’s annual sales for 2011 were $14.9 billion, an increase of 11 percent versus 2010 sales of $13.4 billion. PPG’s full year 2011 net income was $1.1 billion, or $6.87 per diluted share, versus 2010 net income of $769 million, or $4.63 per diluted share. Full year 2010 adjusted net income was $854 million, or $5.14 per diluted share.
“PPG achieved record earnings per share each quarter this year by focusing on strong execution in its global businesses, aggressive cost management and amplified cash deployment,” said Charles Bunch, PPG chairman and chief executive. “In so doing, we delivered the best full year earnings per share in PPG’s history.
“This strong performance was achieved despite moderating global growth rates during the fourth quarter,” Bunch said. “During the year, we experienced uneven economic conditions, persistent raw material inflation, and continued anemic construction activity in developed regions. However, the geographic and end-use market diversity of our business portfolio continued to be an important benefit in 2011.”
For the fourth quarter, Bunch noted that volumes were flat with the prior-year period, as some customers curtailed inventory and remained cautious with their ordering patterns in light of economic uncertainty. This was most evident in Europe, where overall sales volumes fell by one percent.
However, Bunch said that PPG experienced strengthening global demand during the fourth quarter in several end-use markets, including aerospace, automotive manufacturing and several general industrial markets. He added that this higher demand was supplemented by PPG market share gains.
“During the quarter, we continued to aggressively pursue price increases and made further progress in countering high raw material cost inflation. Although prices of many raw materials have stabilized, we plan to implement additional price increases in 2012 to offset the inflation we have already absorbed,” Bunch said.
Looking ahead, Bunch said that he anticipates first quarter 2012 growth to remain uneven by region and varied by industry, similar to the fourth quarter 2011. “We expect the European region to remain the most challenging,” he said. “We expect moderate strengthening in the U.S. economic recovery, supported by an enhanced global cost position in the industrial sector due to lower regional natural gas prices. In the aggregate, emerging-region growth rates are expected to remain high compared to developed regions but more moderate and erratic than they have been in the past.
Performance Coatings segment sales for the quarter were $1.1 billion, up $34 million versus the prior year. Higher selling prices were realized in each business, while segment volumes declined two percent versus last year. The aerospace business continued to deliver excellent growth. Automotive refinish volumes fell modestly due to customer inventory management and softer European economic conditions. U.S. architectural coatings sales improved, including company-owned same-store sales gains of high-single-digit percentages, due to higher pricing, while volumes remained flat. Architectural coatings volumes in emerging regions declined by mid- to high-single-digit percentages, including lower demand in China, and marine volumes declined by mid-single-digit percentages due to reduced shipbuilding activity. Segment earnings were down $30 million from the prior year due primarily to the lower marine and architectural coatings results, including the lower activity levels, higher inflation levels versus pricing and higher costs. The cost increase included higher year-over-year marine customer claims expense and additional selling and marketing costs in architectural coatings.
Industrial Coatings segment sales rose $70 million over last year’s fourth quarter to $1 billion, a seven percent increase. Volume grew four percent based on increased global automotive production and growth in several general industrial end-use markets coupled with PPG market share gains. Segment earnings for the quarter were $106 million, an increase of $27 million over the prior year’s fourth quarter, as volume and price gains combined with continued, strict cost management to offset persistent raw-material cost inflation.
Sales for the Architectural Coatings-EMEA (Europe, Middle East and Africa) segment for the quarter increased $23 million, or five percent, versus the prior year’s period to $449 million, including the negative effects of currency translation. Volumes were up by low-single-digit percentages on share gains despite lower retail and “do-it-yourself” (DIY) store sales. Fourth quarter segment earnings grew $6 million year-over-year to $8 million as a result of the improved volumes in what is seasonally a slow quarter for the business.