PPG warns of “lacklustre” global industrial demand but strength in aerospace and OEM coatings

21 July 2023

PPG has reported its financial results for the second quarter 2023.

  • Record quarterly net sales of US$4.9bn;
  • Organic sales growth of 4% year over year (YOY), led by higher selling prices;
  • Record quarterly earnings per diluted share (EPS) of US$2.06 and adjusted EPS of US$2.25;
  • Significant progress on margin recovery; segment margins up 330 basis points YOY;
  • Strong year-to-date operating cash flow of about US$620M; up about US$750M YOY.

Tim Knavish, PPG President and CEO, commented on the quarter:

“The PPG team delivered record sales and earnings in the second quarter driven by our diverse portfolio. While overall global industrial demand was lacklustre, several of our technology-advantaged businesses and leading brands once again delivered strong growth. In particular, the aerospace, automotive original equipment manufacturer (OEM), automotive refinish coatings and PPG Comex businesses all achieved record sales during the quarter.

“We made excellent progress in restoring operating margins toward our prior historical profile, as we sharply improved year-over-year segment margins by 330 basis points. Additionally, we demonstrated one of our long-standing legacies of strong cash generation with record operating cash flow for the first half of the year and we are targeting further working capital improvements in the second half of the year, specifically in raw materials inventory.

“Looking ahead, we anticipate that the global macroeconomic environment will remain generally consistent with the second quarter including continued tepid global industrial production, along with some incremental slowing in US architectural residential repaint due to significantly lower existing home sales. Given the strength and momentum we have experienced year to date in several of our businesses, such as aerospace coatings and automotive OEM coatings, we expect our diverse portfolio mix to provide us with continued resiliency. On a regional basis, we anticipate modest sequential demand improvement in China and aggregate European demand to stabilise, albeit at current lower absolute levels. In addition, our supply chain and raw material availability has returned to pre-pandemic levels, and in some instances there is excess supply.

“As I mentioned at my CEO investor briefing in May, we remain highly focused on our enterprise growth strategy and partnering with our customers to deliver superior service and products with a focus on enhancing their productivity and sustainability. As a result, we expect to achieve more customer success in subsequent quarters. Lastly, PPG will mark its 140th anniversary in August, a strong testament to the dedication of PPG team members around the world who support our heritage of delivering value to our customers every day.”

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