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Monday, 20 September 2021 22:39

Axalta Expects $40M Less in Net Sales for Q3 Due to Supply Chain Shortages, Raw Material and Logistics Constraints

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Axalta Coating Systems Ltd., a leading global coatings company, provided an update to third quarter and full-year 2021 financial guidance given the ongoing supply chain issues its Mobility customers are experiencing, as well as continued raw material inflation and supply chain and logistics constraints.

Axalta expects net sales for the third quarter to decrease by approximately $40 million relative to volume levels assumed in previously communicated guidance, and for adjusted EBIT to be reported between $130 million and $140 million, benefiting from positive business mix, ongoing price increases and continued cost actions.

 

The prior guidance for Q3 adjusted EBIT (noted as ~20% of the full year target) was $138 million at the midpoint of the range. For full-year 2021, Axalta is withdrawing its previously communicated guidance due to the uncertainty related to these factors and expected financial impacts during the fourth quarter.

 

Since Axalta provided its third quarter and full-year 2021 guidance on July 26, net sales volumes have continued to be impacted by customer supply chain disruptions, most notably in the light vehicle end-market, where semiconductor chip and other supply shortages have continued largely unabated.

 

Industry forecasts for light vehicle production now call for these disruptions to continue into 2022, and Axalta now anticipates global production impacts to total approximately 11 million units for the full year 2021, compared with the previous assumption of 7 million units.

 

In addition, recent weather events in the Southeast U.S. and ongoing global raw material supply and logistics constraints have resulted in...


...continued cost inflation and supply constraints in excess of that anticipated in previously provided guidance.

 

Despite the impact of Mobility customer component shortages and supply chain challenges, underlying demand in Performance Coatings end-markets remains strong. Inventory on hand in customer channels remains below normal levels, which Axalta expects will support a net sales recovery as COVID-19-related impacts and supply chain dynamics ease over time.

 

Axalta expects net sales volumes in both Refinish and Industrial end-markets to remain consistent with previously communicated guidance. On a consolidated basis, Axalta believes strong global demand, supported by active growth initiatives, and a focus on addressing inflationary pressures with price increases, will support a continued recovery in both net sales and profit during 2022 and beyond.

 

Source: Axalta

 

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