Axalta Provides Q4, FY2021 Unaudited Financial Updates

Axalta has provided preliminary selected fourth quarter (Q4) and full-year 2021 unaudited financial updates. According to Axalta, results in the period reflect impacts from greater than previously forecast raw material inflation and supply chain constraints relative to guidance initially provided on 25 October 2021.

The company expects net sales growth of 5.8 per cent for Q4 and 18.2 per cent for 2021, including moderately lower than forecast foreign exchange tailwinds.

Limitations in availability of certain raw materials also resulted in substantial unfulfilled orders during Q4. Axalta anticipates adjusted EBIT for the quarter will be US$120 to 125 million, with full-year adjusted EBIT expected to be approximately US$30 million below the midpoint of the October guidance range of US$645 to 665 million. Free cash flow for the full year 2021 is anticipated to be above the prior guidance range of US$410 to 430 million, with cash and cash equivalents expected at approximately US$840 million as of 31 December 2021.

Axalta said that since its October guidance update, raw material inflation and logistics costs have continued to increase while the US dollar has strengthened above the company’s guidance expectations. Axalta now expects Q4 raw material inflation of approximately 24 per cent versus the prior year compared with the assumption of approximately 20 per cent included in its financial guidance. Further inflationary pressure has affected other cost categories, including supply chain and logistics, while Axalta also saw US$3 million in incremental foreign exchange headwinds to adjusted EBIT versus prior implied Q4 2021 guidance.

Given strong underlying demand conditions across Axalta’s end-markets, including expected improvement in mobility coatings demand, Axalta believes 2022 should remain a year of recovery in volume and profit terms, with the majority of recovery reflected in the second half of the year.

The company said it is also focused on addressing persistent inflationary pressures with price increases. Axalta expects to offset 2021 inflation impacts during the first half of 2022, while also expecting to see continued inflation during 2022 from most categories, requiring incremental price actions. However, the inflationary cost headwinds are expected to decrease sequentially during 2022 following the first quarter, when overall cost inflation is expected to remain fairly consistent with the fourth quarter 2021.

Axalta expects to announce detailed Q4 and full-year 2021 results on 31 January 2022.