Axalta has posted its Q2 2021 financial report, showing net sales of US$1.13 billion, an increase of 72.6 per cent year-over-year, including a 5.3 per cent foreign currency benefit.
The result was driven by 56.4 per cent higher volumes and a 9.3 per cent higher average price and product mix. Volume growth across all end-markets was driven by ongoing recovery from pandemic-related macroeconomic impacts.
According to Axalta, Performance Coatings recorded a 67.1 per cent net sales increase, including ongoing strong growth for the industrial end-market and a continued recovery in refinish end-market demand conditions. Refinish net sales increased 76.8 per cent year-over-year to US$463.1 million in Q2 2021 with nearly 50 per cent volume increases that benefited from continued global traffic recovery. Net sales increased 16.1 per cent in Q2 sequentially versus Q1, including improvement in each month of the quarter. Refinish business volume continued to increase sequentially but remains below 2019 levels as traffic congestion levels are still rebounding from the pandemic, despite total net sales increasing versus the comparable period in 2019.
An 88.2 per cent net sales increase for mobility coatings included the rebound from COVID-19-related vehicle production shutdowns in the prior year quarter, offset partly by ongoing volume impacts due to semiconductor chip shortages, primarily in the light vehicle segment.
Profit from operations for Q2 2021 totalled US$190.4 million versus a loss of US$64.5 million in Q2 2020.
Operating expenses were relatively flat in the period, with the loss of temporary cost reductions from Q2 2020 offset by a benefit from ongoing structural savings actions and the absence of COVID-related accounting charges from Q2 2020.
Axalta’s President and CEO, Robert Bryant, said the company’s second quarter represented a strong rebound from the pandemic-impacted second quarter of last year and was slightly better than Axalta’s expectation set for the period communicated in its last earnings release.
“The company saw notable improvement across all businesses from the prior year period, including continued strong growth in industrial coatings and solid sequential recovery in refinish. While mobility coatings rebounded well from the prior year, the business has and will continue to see impact from the semiconductor chip shortages, primarily impacting light vehicle production globally,” he said.
According to Bryant, Axalta’s strong price and product mix result showcases the ability of its staff and business to react quickly to shifting input cost conditions.
“Axalta’s ability to adapt to volatile conditions remains a core strength of our business, witnessed last year with the pandemic volume impacts and this year as we adjust dynamically to rising input costs and tight supply availability,” Bryant said.
Bryant also referenced Axalta’s acquisition of U-POL, which is expected to close in late Q3 or early Q4 of 2021, saying it represents “a clear and compelling strategic fit” with Axalta’s refinish business.
“We believe that the U-POL business will generate strong returns and will also accelerate growth for our existing refinish businesses given the expected commercial synergies in product offerings, distribution channels, and customer opportunities. We are also excited to be bringing onboard a terrific management team that has proven an ability to grow the business substantially during its tenure,” Bryant said.