PPG reports third quarter 2022 financial results

PITTSBURGH–PPG (NYSE:PPG) today reported financial results for the third quarter 2022.

Third Quarter Consolidated Results

$ in millions, except EPS3Q 20223Q 2021Y-O-Y change
Net sales*$4,468$4,372+2%
Net income$329$344-4%
Adjusted net income**$393$406-3%
Adjusted EPS**$1.66$1.69-2%
*Components of year-over-year net sales change: higher selling prices (+12%), lower sales volumes (-3%), divestiture-related sales and the wind down of Russia operations (-1%), unfavorable foreign currency translation (-6%)**Detailed reconciliations of reported to adjusted figures are included below

Chairman and CEO Comments

Michael H. McGarry, PPG chairman and chief executive officer, commented on the quarter:

We achieved record sales in the third quarter driven by continued selling price realization, resulting in more than a 12% increase in selling prices versus the third quarter 2021 and an 18% increase on a two-year stacked basis. However, as we previously communicated, sales volumes were impacted by further softening demand in Europe and less sequential quarterly demand recovery in China than was expected due to a resumption of certain pandemic-related restrictions. These factors, along with worsening foreign currency translation impacts, caused our sales growth to be lower than anticipated at the beginning of the quarter.

The higher year-over-year sales were aided by record sales in our PPG Comex and global automotive refinish businesses. In addition, both the aerospace and automotive original equipment manufacturer (OEM) coatings businesses delivered double-digit percentage sales volume gains, though demand in both industries remains well below pre-pandemic levels. Overall supply chain disruptions continued to broadly ease throughout the quarter; however, a few lingering short-supplied raw materials had impacts across several businesses. At quarter-end, the automotive refinish and aerospace coatings businesses continued to have much larger than traditional order backlogs totaling about $200 million.

Looking ahead, normal seasonal demand trends are anticipated in the fourth quarter. In addition, economic activity is forecasted to remain soft in Europe and China, and demand for architectural do-it-for-yourself (DIY) paint products is likely to continue to weaken on a global basis. Due to the reduced economic activity, an additional cost restructuring program is now underway focused on fast payback actions targeting $70 million of annualized savings upon full implementation. We continue to expect our business portfolio to prove more resilient in the coming quarters as several of our larger businesses, including automotive OEM and aerospace coatings, are anticipated to deliver growth due to large supply deficits and low inventories in these end-use markets. Finally, we expect that our year-over-year operating margins will improve in the fourth quarter and into 2023 as we work to restore our historical margin profile through our actions to fully offset inflation and manage our costs.

Lastly, I want to thank our global employees who demonstrate The PPG Way every day by continuing to overcome unexpected challenges to provide our customers across the world with the products and excellent service they rely on.

Third Quarter 2022 Reportable Segment Financial Results

  • Performance Coatings segment
$ in millions3Q 2022 3Q 2021 Y-O-Y change
Net sales$2,705 $2,758 -2%
Segment income$362 $408 -11%
Segment income %13.4% 14.8%  
Sales volumes  -6%
Selling prices  +11%
Divestitures and wind down of Russia -1%
Foreign currency translation -6%

Performance Coatings net sales decreased due to lower sales volumes, the impact of divestitures, the wind down of business in Russia, and unfavorable foreign currency translation impacts. These items were partially offset by selling price increases in all businesses.

Supply chain disruptions continued to moderate during the quarter, albeit with some remaining challenges. Most notably, disruptions continued to impact the automotive refinish and aerospace coatings businesses. As expected, demand for architectural coatings DIY products in Europe remained soft due to decreased consumer confidence and customer inventory destocking stemming from current geopolitical issues. Sales volumes in the U.S. architectural coatings business were also impacted by weaker DIY demand, which offset positive trends related to our recently announced expanded relationship with The Home Depot® in the professional paint channel. Automotive refinish coatings organic sales grew by a mid-single-digit percentage driven by higher selling prices that were partially offset by lower sales volumes, most notably in China due to COVID-19 restrictions. Aerospace sales volumes were up more than 10% compared to third quarter 2021 as aftermarket demand continued to recover and commercial new build activity began to improve. Traffic solutions delivered organic sales growth of more than 10% compared to the prior year. Organic sales in the protective and marine coatings business grew by a low-single-digit percentage despite COVID-19 restrictions in China negatively impacting sales volumes.

Segment income was lower than the prior year mainly due to raw material, logistics, and labor cost inflation, the impact of lower sales volumes, unfavorable currency translation and increased manufacturing costs, partially offset by higher selling prices coupled with restructuring cost savings. Unfavorable foreign currency translation negatively impacted segment earnings by nearly $25 million.

  • Industrial Coatings segment
$ in millions3Q 2022 3Q 2021 Y-O-Y change
Net sales$1,763 $1,614 +9%
Segment income$192 $140 +37%
Segment income %10.9% 8.7%  
Sales volumes  +2%
Selling prices  +14%
Divestitures and wind down of Russia -1%
Foreign currency translation -6%

Industrial Coatings net sales increased due to higher selling prices across all businesses and increased sales volumes, partially offset by unfavorable foreign currency translation and the wind down of business in Russia. Automotive OEM coatings organic sales were up more than 20% due to higher selling prices and sales volumes, including record sales in Asia Pacific reflecting the company’s strong position in this region and robust retail sales in China. Automotive OEM customer production outages due to component shortages continued to impact sales in the U.S. and Europe, but moderated year-over-year. Industrial coatings organic sales were up a high single-digit percentage driven by strong selling price realization, partially offset by lower sales volumes in Europe and China due to softer industrial production activity. Packaging coatings delivered organic sales growth of about 10% led by higher selling prices and continued U.S. sales volume strength.

Segment income was higher than the prior year by $52 million mainly due to higher selling prices and improving sales volumes, partially offset by increased raw material and energy costs and foreign currency translation. Segment margins improved on a sequential quarterly basis compared to the second quarter 2022.

Additional Financial Information

  • At quarter end, the company had cash and short-term investments totaling about $1.1 billion. Net debt was $5.7 billion, about $400 million lower than the end of the second quarter 2022. Inventories declined in comparison to the second quarter and the company remains focused on further reductions in the fourth quarter, including destocking higher-than-normal raw material inventories.
  • Corporate expenses were about $60 million in the third quarter.
  • Acquisition-related synergies and business restructuring programs delivered about $25 million of cost savings.
  • The company’s reported and adjusted effective tax rates for the third quarter were about 19% and 20%, respectively.


The company today reported the following projections for the fourth quarter 2022 based on current global economic activity and in consideration of the near-term economic uncertainty associated with the impact of geopolitical issues in Europe and the continuing pandemic:

  • Aggregate sales volumes down a mid-single-digit percentage year over year
  • Corporate expenses of between $55 million and $60 million
  • Net interest expense of between $35 million and $40 million
  • Effective tax rate of about 20%
  • Reported EPS of $0.90 to $1.05
  • Adjusted EPS of $1.05 to $1.20, excluding amortization expense of $0.13 and costs related to previously approved and communicated business restructuring of $0.02.

A detailed commentary and associated presentation slides related to the third quarter financial information is posted on the company’s investor relations website.

The term organic sales as used in this press release is defined as net sales excluding the impact of currency, divestitures, and the wind down of Russia operations.


At PPG (NYSE:PPG), we work every day to develop and deliver the paints, coatings and specialty materials that our customers have trusted for nearly 140 years. Through dedication and creativity, we solve our customers’ biggest challenges, collaborating closely to find the right path forward. With headquarters in Pittsburgh, we operate and innovate in more than 75 countries and reported net sales of $16.8 billion in 2021. We serve customers in construction, consumer products, industrial and transportation markets and aftermarkets. To learn more, visit www.ppg.com.

The PPG Logo and We protect and beautify the world are registered trademarks of PPG Industries Ohio, Inc.

Additional Information

PPG will provide detailed commentary regarding its financial performance, including presentation-slide content, on the PPG Investor Center at www.ppg.com at about 4:30 p.m. ET today, October 19. The company will hold a conference call to review its third quarter 2022 financial performance on October 20, at 8:00 a.m. ET. Participants can pre-register for the conference by navigating to https://www.netroadshow.com/events/login?show=0d492aeb&confId=42260.

The conference call also will be available in listen-only mode via Internet broadcast from the PPG Investor Center at www.ppg.com. A telephone replay will be available, October 20, beginning at approximately 10:30 a.m. ET, through November 3, at 11:59 p.m. ET. The dial-in numbers for the replay are: in the United States, 1-866-813-9403; Canada, 1-226-828-7578; UK, (Local) 0204-525-0658; international, +44-204-525-0658; passcode 120928. A Web replay also will be available shortly after the call on the PPG Investor Center at www.ppg.com, and will remain through Thursday, October 19, 2023.

Forward-Looking Statements

Statements contained herein relating to matters that are not historical facts are forward-looking statements reflecting PPG’s current view with respect to future events and financial performance. These matters within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, involve risks and uncertainties that may affect PPG’s operations, as discussed in the company’s filings with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, and the rules and regulations promulgated thereunder. Accordingly, many factors could cause actual results to differ materially from the forward-looking statements contained herein. Such factors include statements related to the expected effects on our business of COVID-19, global economic conditions, geopolitical issues in Europe, the amount of future share repurchases, increasing price and product competition by our competitors, fluctuations in cost and availability of raw materials, energy, labor and logistics, the ability to achieve selling price increases, the ability to recover margins, customer inventory levels, PPG inventory levels, the ability to maintain favorable supplier relationships and arrangements, the timing of realization of anticipated cost savings from restructuring and other initiatives, the ability to identify additional cost savings opportunities, the timing and expected benefits of potential future and completed acquisitions, difficulties in integrating acquired businesses and achieving expected synergies therefrom, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, foreign exchange rates and fluctuations in such rates, fluctuations in tax rates, the impact of future legislation, the impact of environmental regulations, unexpected business disruptions, the unpredictability of existing and possible future litigation, including asbestos litigation, and governmental investigations. However, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here and in our 2021 Annual Report on Form 10-K and June 30, 2022 Form 10-Q are considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results compared with those anticipated in the forward-looking statements could include, among other things, lower sales or earnings, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on PPG’s consolidated financial condition, results of operations or liquidity.

All information in this release speaks only as of October 19, 2022, and any distribution of this release after that date is not intended and will not be construed as updating or confirming such information. PPG undertakes no obligation to update any forward-looking statement, except as otherwise required by applicable law.

Republished from -(BUSINESS WIRE)-

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