Axalta has announced its financial results for the fourth quarter and full year ended 31 December 2021. Fourth quarter net sales were US$1.14 billion, driven by 3.6 per cent higher average price and product mix and a 3.9 per cent mergers-and-acquisitions contribution.
Income from operations for the quarter totalled US$94.7 million versus US$163.2 million in the fourth quarter of 2020.
Refinish net sales increased 12.8 per cent year-over-year to US$470.9 million, including a 4.5 per cent year-over-year volume increase as stabilised global traffic supported stronger demand in the period. Average price and product mix increased low single digits in the period, including moderate mix headwinds, to counteract rising variable cost inflation. The U-POL acquisition contributed 8.1 per cent to overall net sales growth for Refinish in the period.
Robert Bryant, Axalta’s President and CEO, said Axalta’s fourth quarter results underscored strong continued operating execution during 2021. “The business produced strong cash flow and managed well through a challenging environment marked by extensive cost inflation and supply chain headwinds, and also recent pandemic-driven labour constraints impacting Axalta and customer production sites.”
Axalta’s full year consolidated financial results reveal net sales of US$4.4 million, an increase of 18.2 per cent, including a 1.8 per cent foreign currency benefit and a 1.9 per cent mergers and acquisitions contribution compared with 2020.
Constant currency organic net sales increased 14.5 per cent in the period over 2020, driven by 10.5 per cent higher volume as a result of recovery from COVID-19 impacts and 4.0 per cent higher average price and product mix.
Income from operations increased 51.4 per cent to US$462.4 million for 2021 from US$305.5 million in 2020.
The company ended the year with cash and cash equivalents of US$840.6 million and total liquidity of approximately US$1.4 billion.
Bryant said 2021 began with strong overall demand and pandemic recovery tailwinds but quickly ran into macro roadblocks from cost inflation and supply constraints.
“Despite these factors, Axalta’s execution was strong and the company delivered an increase in operating earnings and also robust overall cash flow,” Bryant said. “This was highlighted by excellent ongoing organic growth coming from the portfolio of businesses in our Industrial end-market and by excellent traction seen in achieving pricing offsets to inflationary cost pressures.”
According to Bryant, Axalta continues to enjoy strong demand across nearly every business line, though strong underlying consumer demand in Mobility Coatings continues to be unmet due to OEM customer production disruptions.
“For 2022, we expect a year of continued solid end-market demand and anticipate potential stabilised raw material cost inflation after the first quarter of 2022, which is expected to also be a peak quarter for inflation rates despite expectations for low double-digit inflation to be recorded this year,” Bryant said.
“We continue to take active steps to offset these headwinds by implementing pricing and cost actions, though exiting the year, a gap remains between cost inflation and realised offsets. As such, we are implementing additional price actions as required to offset cost increases across our enterprise. Our current expectation is that, in aggregate, remaining uncovered inflation from 2021 as well as incremental inflation expected this year will be offset fully during the course of 2022.”