PPG Industries(US:PPG)2023-02-16 20:02Financial Performance - Net sales for 2022 increased to $17,652 million, up 5.06% from $16,802 million in 2021 [223]. - Net income attributable to PPG for 2022 was $1,026 million, a decrease of 28.8% compared to $1,439 million in 2021 [223]. - Earnings per share from continuing operations, net of tax, was $4.35 in 2022, down 27.6% from $5.98 in 2021 [223]. - Total comprehensive income for 2022 was $981 million, a decline of 24.8% from $1,304 million in 2021 [224]. - Cash from operating activities decreased to $963 million in 2022 from $1,562 million in 2021, reflecting a decline of 38.4% [229]. Assets and Liabilities - Total current assets rose to $7,173 million in 2022, up from $6,774 million in 2021 [225]. - Total liabilities decreased to $14,035 million in 2022, down from $14,940 million in 2021 [225]. - Shareholders' equity attributable to PPG increased to $6,592 million in 2022, compared to $6,286 million in 2021 [225]. - As of December 31, 2022, total receivables amounted to $3,303 million, an increase from $3,152 million in 2021 [279]. - The company's total inventories were valued at $2,272 million as of December 31, 2022, compared to $2,171 million in 2021 [279]. Cash Flow and Investments - Cash and cash equivalents increased to $1,099 million in 2022, compared to $1,005 million in 2021 [225]. - Cash used for investing activities was $461 million in 2022, a significant decrease from $2,404 million in 2021 [229]. - The net increase in cash and cash equivalents for 2022 was $94 million, contrasting with a decrease of $821 million in 2021 [229]. - The company paid dividends totaling $570 million in 2022, compared to $536 million in 2021, marking a 6.3% increase [229]. - Capital expenditures increased to $518 million in 2022 from $371 million in 2021, reflecting a 39.7% rise [229]. Impairment and Charges - The company reported an impairment and other related charges of $245 million in 2022, significantly higher than $21 million in 2021 [223]. - The company recorded impairment charges of $124 million related to indefinite-lived intangible assets and $23 million for definite-lived intangible assets due to the impact of the Ukraine conflict [256]. - In Q1 2022, the company recognized $290 million in impairment and other related charges, including $201 million for long-lived asset impairment and $89 million for other related charges due to the impact of the Russian invasion of Ukraine [290]. - The long-lived asset impairment charges included $124 million related to indefinite-lived intangible assets, $54 million for property, plant, and equipment, and $23 million for definite-lived intangible assets [291]. - The company reported a total of $245 million in impairment and other related charges in 2022, compared to $21 million in 2021 [229]. Debt and Financing - PPG had non-U.S. dollar denominated debt outstanding of $2.6 billion as of December 31, 2022, compared to $1.6 billion in 2021 [202]. - The company’s long-term debt increased to $6.806 billion in 2022 from $6.575 billion in 2021, with a weighted average interest rate of 4.4% [304]. - As of December 31, 2022, PPG had outstanding borrowings of $1.1 billion under the Term Loan Credit Agreement, down from $1.4 billion in 2021 [309]. - PPG's Credit Agreement provides for a $2.2 billion unsecured revolving credit facility, with no amounts outstanding as of December 31, 2022 [314]. - Long-term debt maturities include $303 million in 2023 and $1.396 billion in 2024 [321]. Currency and Interest Rate Exposure - A 10% increase in the value of the euro to the U.S. dollar would have reduced the fair value of PPG's U.S. dollar to euro cross currency swap contracts by $73 million as of December 31, 2022 [201]. - A weakening of the U.S. dollar by 10% against European currencies would have resulted in unrealized translation losses of $293 million as of December 31, 2022 [202]. - The fair value of foreign currency forward contracts was a net asset of $24 million as of December 31, 2022 [200]. - PPG uses interest rate swaps to manage exposure to changing interest rates, with a liability of $20 million for these swaps at December 31, 2022 [331]. - The indicative borrowing rate on a one-month, U.S. dollar denominated borrowing was 4.4% at December 31, 2022 [314]. Pension and Employee Benefits - The projected benefit obligation (PBO) for defined benefit pension plans decreased from $3.534 billion in 2021 to $2.386 billion in 2022, a reduction of approximately 32.5% [361]. - The accumulated benefit obligation (ABO) for all defined benefit pension plans was $2.3 billion as of December 31, 2022, down from $3.5 billion in 2021, representing a decline of 34.3% [361]. - The net periodic benefit cost for pensions in 2022 was a benefit of $18 million, compared to a cost of $14 million in 2021, indicating a positive shift in the financial position [365]. - The market value of plan assets decreased from $2.975 billion in 2021 to $1.974 billion in 2022, a decline of approximately 33.6% [361]. - The company recognized a non-cash pension settlement charge of $50 million in 2021 due to the purchase of group annuity contracts, which reduced pension projected benefit obligations by approximately $175 million [358]. Taxation - The total income tax expense for 2022 was $325 million, a decrease from $374 million in 2021 [346]. - The effective income tax rate for 2022 was 23.5%, an increase of 2.9% from the prior year [346]. - The total amount of unrecognized tax benefits as of December 31, 2022, was $145 million, down from $158 million in 2021 [354]. - The Company recognized a gain of $38 million in Other Comprehensive Income (OCI) related to cross currency swaps in 2022 [338]. - The Company had $4.6 billion of undistributed earnings from non-U.S. subsidiaries as of December 31, 2022 [351].