PPG recently reported third quarter 2016 net sales of $3.8 billion, up almost 2% vs. the prior-year figure of $3.7 billion. Sales volumes grew 1.6% and acquisition-related sales contributed more than 2%, partly offset by a slight decline in selling prices. Unfavorable foreign currency translation impacted net sales by nearly 2%, or about $65 million.
“We grew adjusted earnings per share by 1% vs. the prior year, which is well below our expectations but reflective of the sluggish global economy,” said Michael H. McGarry, chairman and CEO. “Our third-quarter global sales volumes grew 1.6% despite a noticeable and broad deceleration of volume growth trends in Europe, where most of our coatings businesses experienced lower growth rates compared to the second quarter.”
Performance coatings segment net sales were $2.22 billion, down $17 million, or less than 1%, year-over-year. Sales volumes were up about 1%, and acquisition-related sales added approximately $15 million, or less than 1%, for the third quarter 2016 vs. the prior-year period.
Automotive refinish coatings sales growth continued at a low-single-digit percentage rate in constant currencies, reflecting higher end-use demand in the Asia-Pacific region that was partly offset by modest European demand declines. Aerospace grew sales volumes at a low-single-digit percentage year-over-year, consistent with the past quarter. Protective and marine coatings sales volumes declined by a mid-single-digit percentage, as gains in protective coatings were more than offset by marine coatings declines stemming from lower shipbuilding activity in Asia-Pacific.
Sales volumes declined by a low-single-digit percentage in architectural coatings–EMEA, led by weakness in central Europe. Architectural coatings–Americas and Asia-Pacific sales volumes improved by a low- to mid-single-digit percentage vs. a weak prior-year comparable period, as volumes in the U.S. and Canada company-owned stores network and national retail account (do-it-yourself, or DIY) channels improved, including certain new product sales at several major retail customers. Sales volumes in the U.S. independent dealer channel were flat year-over-year. In Latin America, Mexico constant currency sales grew at more than double the Mexican gross domestic product (GDP) growth rate, and business expansion continued in Central America.
Performance coatings segment income for the third quarter 2016 was $368 million, down 3%, or $11 million, vs. the prior year. Unfavorable foreign currency translation, including the Mexican peso and British pound, negatively impacted segment income by $10 million year-over-year. Higher sales volumes generated increased segment income, but they were offset by about $15 million of incremental growth-related spending.
Industrial coatings segment net sales for the third quarter were $1.44 billion, up $83 million, or more than 6%, compared to the previous year. Sales volumes grew by almost 4% led by growth in the Asia-Pacific region and Europe, although European volume growth moderated vs. previous quarters. Acquisition-related sales added approximately 5%, or about $75 million. Unfavorable foreign currency translation reduced sales by more than 1%, or approximately $15 million.
Automotive original equipment manufacturer (OEM) coatings sales volumes grew by a low- to mid-single-digit percentage vs. the prior-year period, consistent with global industry growth rates. General industrial coatings and specialty coatings and materials aggregate sales volumes grew by a mid-single-digit percentage and outpaced growth in global industrial production for the third consecutive quarter, as strong Asian demand offset continued soft end-use market demand in the U.S. and Canada region. Packaging coatings sales volumes grew by a low- to mid-single-digit percentage, driven by ongoing new-technology conversions and despite comparison to strong growth in the prior-year period.
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