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PPG's Q3 earnings: slower than expected

2/20/2018

PPG posted positive growth in sales for the third quarter, but earnings came in lower than expected, largely due to unfavorable conditions abroad.


Net sales for the quarter came in at $3.8 billion, up nearly 2% compared to last year's sales of $3.7 billion.


Sales volumes were up 1.6%, and acquisition-related sales contributed more than 2%. However, unfavorable foreign currency translations hindered sales by nearly 2%.


Meanwhile, the company sustained a net loss of $184 million, compared to last year's income of $433 million.


“We grew adjusted earnings per share by 1% versus the prior year, which is well below our expectations but reflective of the sluggish global economy,” said Michael McGarry, PPG chairman and CEO. “Our third quarter global sales volumes grew 1.6% despite a noticeable and broad deceleration of volume growth trends in Europe, where most of our coatings businesses experienced lower growth rates compared to the second quarter."


"Year-over-year volumes improved across both of our coatings reporting segments, led by growth in our Industrial Coatings segment, where general industrial and packaging coatings continued to outpace their respective markets. Volumes grew modestly in the Performance Coatings segment, as architectural coatings growth both in the U.S. and Canada region and in Mexico was partially offset by slight declines in architectural coatings – Europe, Middle East and Africa and persistently weak demand for marine coatings,” McGarry continued.


“Versus our expectations at the beginning of the quarter, our third quarter earnings were impacted by slower-than-expected volume growth rates in Europe and higher-than-anticipated unfavorable foreign currency translation stemming from weakening in the Mexican peso and British pound. In addition, we had higher spending on growth-related initiatives primarily to support new product launches,” McGarry said.


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