PPG profit soars 64 percent in third quarter
Acquisitions remain a focus for PPG Industries Inc., which has $3 billion in cash that it can spend to increase performance, CEO Charles E. Bunch said Thursday when the company reported a 64 percent jump in third-quarter profit.
“We have a very active acquisition pipeline,” Bunch said. “Including the pending acquisition of Comex, we will likely spend at or above the top end of our previously announced range of $3 billion to $4 billion of cash in 2014 and 2015 on acquisitions and share repurchases.”
PPG’s latest deal is the purchase of Consorcio Comex S.A. de C.V., a leading paint company in Mexico, for $2.3 billion. The deal announced June 30 is expected to be completed by Dec. 31.
So far this year, PPG has spent $450 million to buy back about 2.4 million shares, an action that boosts stock price.
PPG’s third-quarter profit was helped by better results in Europe, but sales missed analysts’ estimates by $40 million.
Analyst Ghansham Panjabi at Robert W. Baird & Co. in New York said sales were modestly lower than his forecast in commercial coatings and glass segments, offset by strength in industrial coatings.
“Regardless, $3 billion of cash at quarter-end plus additional (cash) generation in the fourth quarter and management comments should sum to a net positive from our perspective,” Panjabi said.
PPG shares closed at $181.83, up $1.33, but are down 4.1 percent for the year after declining from a high of $213 in May.
“We continue to benefit from customer adoption of our leading technologies,” Bunch said. “Our sales performance was driven by continued gains in aerospace, automotive original equipment coatings and automotive refinish, where our growth this quarter matched or exceeded recent quarters.”
Net income was $371 million, or 2.66 a share, compared with $226 million, or $1.56 a share, in the same period a year ago. Adjusted earnings per share of $2.82 were 7 cents higher than analyst expectations. Adjustments included gains from asset sales offset by expenses for legacy environmental costs, acquisition costs and a pension settlement.
Profit in European markets improved by 17 percent despite mixed performance in some countries, Bunch said. Overall, sales increased 4.3 percent to $3.94 billion compared with $3.77 billion last year, also benefitting from better commercial construction and marine coatings markets that underperformed for several years, he said.
John D. Oravecz is a Trib Total Media staff writer. Reach him at 412-320-7882 or [email protected].