"Our coatings segments delivered excellent results," said Charles E. Bunch, PPG chairman and CEO. "The Performance Coatings segment established a new all-time earnings record, and the Industrial Coatings segment earnings matched the previous record. This was done despite operating margins for these segments that dropped modestly versus last year as a result of the weakened April volumes and an architectural customer bankruptcy charge." He stated that coatings margins in May and June were consistent with the prior year, as volume growth resumed and prices were increased in all eight coatings businesses to counter inflationary pressures.
Bunch noted that April was the weakest month in the quarter, with negative year-over-year company volumes due to several issues including the full brunt of automotive OEM industry production curtailments due to supplier disruptions related to the March earthquake and tsunami in Japan, poor weather-related architectural painting conditions in the United States, and production downtime in the Commodity Chemicals segment. "Our sales volumes rebounded soundly after April, with most segments realizing mid-single-digit percentage volume gains in May and June versus last year," he said.
"We anticipate the global economic recovery will continue, although at its current uneven pace," Bunch said. "The resumption of automotive OEM production and our position in high-growth businesses and regions, such as aerospace and Asia/Pacific, will supplement PPG¹s growth in the remainder of the year." He noted that although inflation has moderated somewhat, PPG intends to secure additional pricing in businesses where it has been unable to fully offset inflation despite aggressive cost management and further pricing actions this past quarter. These factors are expected to be coupled with continued positive price trends in the Commodity Chemicals segment, he said.
Performance Coatings segment sales for the quarter were $1.2 billion, up $119 million, or 11 percent, versus last year's second quarter. Each business delivered higher selling prices, and foreign currency translation aided segment sales. Overall segment volumes were flat with improved volumes in aerospace and automotive refinish offsetting lower architectural coatings volumes, due principally to the impact of poor weather conditions in April. Segment earnings grew $14 million to an all-time quarterly record of $204 million, reflecting the benefit from the higher sales, as higher selling prices and lower overhead costs further countered persistent raw material cost inflation.
