Paint Maker PPG Posts Lower Sales on Weak Industrial Demand
July 18 2019 - 7:31AM
Dow Jones News
By Austen Hufford
PPG Industries Inc. said weak demand from industrial clients is
hurting sales, challenging the company's decision to keep its paint
and coatings businesses joined together.
Lower car production in China and Europe meant reduced
paint-and-coatings sales for vehicles there, the company said, and
clients in other industries bought less of PPG products too. PPG's
revenue fell 2.6% in the second quarter to $4.02 billion. The
company predicted weak demand would continue into the third
quarter.
Pittsburgh-based PPG is facing tough competition from
consolidating rivals in its paint business at the same time that it
tries to focus more on higher-margin industrial coatings.
Activist fund Trian Fund Management LP, which holds a 2.5% stake
in PPG, had called for the company to explore breaking those units
apart. PPG Chief Executive Michael McGarry said in May that the
company was better off stuck together.
PPG now expects revenue this year to grow by a few percentage
points at most when adjusted for currency changes, down from a
forecast of growth between 3% and 5% previously.
For the U.S. economy as a whole, factory production has declined
this year, due in part to trade tensions and tariffs. China's
economic growth slowed to its lowest pace in decades as trade
tensions weighed on investment and buying in the country.
Price increases in the latest quarter helped offset lower sales
volumes and the impact of rising raw material costs in recent
years. Another plus: Sales to aerospace and marine-coatings
customers grew. But bad weather lead to flat same-store sales at
company-owned paint stores in the U.S. and Canada, PPG said.
The company also is trying to boost its U.S. buildings paint
business, where volumes have declined in recent years.
PPG reaffirmed its goal of profit-per-share growth of at least
7% this year. Adjusted earnings per share in the second quarter
fell to $1.85 from $1.90.
(END) Dow Jones Newswires
July 18, 2019 08:16 ET (12:16 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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