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Price of PPG coating products keeps rising
POSTDATE: 2019-11-17    FROM: Dynamics

The fourth quarter performance of 2017 released by PPG Industry Co., Ltd. of the United States on Thursday was better than the market expectation. The stock price of the company jumped short and opened high on the same day, with a rise of more than 6.6% at one time, reaching a new high for more than two years, closing slightly lower, closing at US $118.41/share, up 3.8% all day, making the largest one-day increase in the near future.

 

According to the company, the increase in performance is mainly due to its "stable and balanced growth" in sales in all major regions of the world. The average selling price of PPGs coating products has risen for the third consecutive quarter, thus maintaining an increase in profit margin - although the cost of raw materials in the fourth quarter was higher than expected. The company believes that the higher than expected rise in raw material prices is due to continued supply problems, including production decline due to Chinas environmental law enforcement.

 

In 2017, PPGs net sales from continuing operations amounted to about $14.8 billion, an increase of more than 3% over the previous year, of which the favorable currency exchange rate increased the performance by nearly 1%, i.e. about $55 million; the sales volume increased by 1.5% compared with the previous year, and the growth driven by M & a revenue exceeded 1%. In 2016, the companys net profit from continuing operations was $1.408 billion, an increase of 157.4% compared with 2016s performance. However, the adjusted net profit for the whole year was $1.513 billion, an increase of only 0.5% compared with the same period last year. This is mainly because in 2016, non recurring income of nearly $300 million was generated due to business restructuring and one-time compensation for asbestos problems, and the pension settlement income of that year was as high as more than $600 million.

 

In the fourth quarter of 2017, the net sales volume of PPG company was about 3.7 billion US dollars, an increase of nearly 8% over the same period of last year, a year-on-year increase of 3% and a third consecutive quarter on quarter increase of sales price, which led to an increase of nearly 1% in sales volume; the favorable currency exchange rate led to an increase of 3% in sales volume, i.e. about 115 million US dollars; the sales volume related to acquisition (excluding divestiture) increased by less than 1%.

 

In the fourth quarter, the net sales volume of PPG high-performance coating business unit was US $2.1 billion, an increase of US $144 million, or more than 7%. The increase in sales was driven by higher sales prices in most businesses and regions, with sales growing by more than 2% and a favorable currency exchange rate driving net sales growth of about $67 million (or 3%).

 

The performance of automotive touch up paint in European and American markets is strong. Driven by the strong demand in emerging markets, the sales volume has achieved a median growth. With the growth of demand in the U.S. and Asian markets, the growth of aviation coating sales has accelerated, reaching a median growth. The sales volume of architectural coatings in the Americas and Asia Pacific region has achieved low to medium single digit growth year on year, which varies by channel and region. In the U.S. and Canada, the companys retail sales of architectural coatings increased steadily, while the total sales of DIY retail and independent dealer network were the same as that of the same period last year. Sales of construction coatings in Latin America were flat from the previous year as growing end market demand was offset by the adverse effects of the Mexican earthquake. In Europe, the Middle East and Africa, the sales volume of architectural coatings was the same as that of the previous year, and improved compared with the third quarter, with different results in different countries. On the whole, the sales volume of protective coatings and ship coatings was the same year on year, and the growth of sales of protective coatings offset the decline of sales of ship coatings.

 

The net sales volume of PPG industrial coatings business unit in the fourth quarter was about US $1.6 billion, an increase of US $121 million or more than 8% over the same period of last year. Sales volume increased by more than 4%, driven by favorable currency exchange rate, by nearly US $46 million, i.e. about 3%. Sales price decreased slightly year on year, but it improved compared with the third quarter, and sales related to acquisition increased by US $27 million, up about 2% year on year.

 

The sales volume of automobile OEM coatings increased by a single digit year-on-year, which is in line with the development of the global automobile industry. The sales volume of industrial coatings, special coatings and materials of the company has achieved a year-on-year median growth, and exceeded the average growth rate of global industrial production for the eighth quarter in a row, among which the company has achieved good growth in many end markets. The sales volume of packaging coating has a high single digit growth year-on-year, among which the sales growth in most regions is higher than the industry average due to the customers replacement of PPG new technology products.

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