Reports record fourth quarter net sales in the aerospace, automotive refinish and automotive original equipment manufacturer (OEM) coatings.
PPG (NYSE: PPG) today reported record fourth quarter net sales of $4.4 billion, up 4% year over year (YOY), including organic sales growth of 1%. For the full year, the company reported record sales of $18.2 billion; aided by 3% organic sales growth.
According to prepared remarks for its earnings conference call with investors, the strong financial performance was bolstered by record fourth quarter net sales in the aerospace, automotive refinish and automotive original equipment manufacturer (OEM) coatings businesses and strong organic growth in the protective and marine coatings business.
Tim Knavish, PPG chairman and chief executive officer, commented on the quarter and 2023, saying, “Capping off a record year, the PPG team delivered solid year-over-year sales growth, strong adjusted earnings growth and record operating cash flow. The breadth and diversity of our business portfolio was a key driver to our record fourth quarter performance, as we benefited from solid volume growth in China, demand stabilization in Europe and continued growth in several key end-use markets such as aerospace, automotive original equipment manufacturer (OEM) and protective coatings.”
“We made strong progress on returning to our historic segment margin profile while delivering segment earnings growth of 30% and an aggregate segment margin improvement of 260 basis points, marking the fifth consecutive quarter of year-over-year margin improvement. Additionally, our earnings growth and working capital management resulted in strong cash generation in the quarter and record operating cash flow of over $2.4 billion for the year. We ended the year with a strong balance sheet that, coupled with our legacy of solid cash flow, provides us with shareholder value creation opportunities going forward,” continued Knavish. “Looking at the full year, in addition to our record financial performance, we successfully implemented various strategic initiatives to strengthen the company, including key actions to position PPG for higher organic growth. We also executed on our ongoing portfolio review leading to the divestitures of both our European and Australian Traffic Solutions businesses and the recently announced strategic alternatives review of the silicas products business. Finally, we have continued our heritage of rewarding our shareholders with our 124th consecutive year of dividend payments, including 52 consecutive years of dividend increases.
Automotive Refinish
According to prepared remarks for its call with investors, fourth quarter organic sales for automotive refinish coatings increased a low single-digit percentage year over year. Price gains in all regions and sales volume growth in Europe and Asia Pacific were partially offset by lower sales volumes in the U.S. primarily due to a strong comparable period in the fourth quarter 2022 when organic sales were up a double-digit percentage. In the U.S., body shop activity moderated somewhat from high activity levels reflecting lower collision claims and normalization of repair backlogs.
In Europe, sales volumes were solidly above the prior year for the second consecutive quarter. In China, demand for refinish products is slowly recovering and expected to continue to improve in the coming quarters. In the fourth quarter, the company continued to win new body shops and grow its LINQ services subscriptions.
Additionally, nearly 560 Moonwalk installations during the year are further supporting customer productivity and related share gain. The company expects first quarter global net sales to increase by a low single-digit percentage compared to the first quarter 2023.
Segment income increased by 19% versus the prior year primarily due to higher selling prices and moderating input costs. Segment operating margins improved by 150 basis points year over year.