“In the second quarter, PPG delivered the highest quarterly earnings per share in company history as a result of continued execution, strong cost discipline and effective cash deployment,” said Charles Bunch, PPG chairman and CEO. “These record earnings were achieved despite significantly weaker European and Latin American currency exchange rates and growth that varied by region and end-use market.”
Performance coatings segment sales for the quarter were $1.2 billion, up one percent versus the prior year. The aerospace business delivered strong growth in all regions, and U.S. architectural coatings sales were seasonally stronger than the first quarter and improved by mid-single-digit percentages over a difficult prior-year comparison period that included channel stocking for the new Olympic One product. Protective and marine coatings volumes were muted, with gains in protective coatings offset by lower marine demand. Automotive refinish volumes declined due to lower European demand and customer destocking. Segment earnings for the quarter of $204 million were level with the prior-year period.
Industrial coatings segment sales for the quarter were $1.1 billion, an increase of $24 million, or two percent, versus the prior year. Segment volumes grew by more than 20 percent in the United States, including strong automotive OEM (original equipment manufacturer) coatings business performance. Growth in emerging regions continued but was mixed by end-use market, including in Asia where strong automotive OEM coatings results outpaced lower demand in construction-related markets. European volumes declined by about 10 percent. Segment earnings for the quarter were $143 million, an increase of $28 million from the prior year.
Architectural coatings - EMEA (Europe, Middle East and Africa) segment sales for the quarter of $601 million decreased $10 million, or two percent, versus the prior year due to lower volumes partly offset by price. Currency translation negatively impacted sales by 10 percent but was offset by sales from the Dyrup acquisition completed in January 2012. Despite mid-single-digit segment volume declines, segment earnings grew by $14 million versus the prior year’s second quarter to reach $64 million, aided by acquisition performance and continued cost-management actions.
“Overall, our sales in local currencies grew in the quarter, led by continued strong organic growth in North America,” Bunch said. “Business in emerging regions also expanded, but results were mixed by end-use market. Organic growth in North America and emerging regions was comparable to first quarter performance; however, these gains were partly offset by a further, fairly broad step-down in European demand. These regional variations were evident in nearly all our global businesses, which resulted in an overall flattening of our worldwide volume growth rate.
“Aerospace and automotive manufacturing remained our strongest end-use markets, delivering excellent growth, and recent acquisitions aided sales and earnings results,” Bunch said.