Press release·04/30/2025 20:17:39

Financial Performance Overview

PPG, a leading global manufacturer of paints, coatings and specialty materials, has reported its financial results for the first quarter of 2025. The company saw a 4.3% decrease in net sales compared to the same period in the prior year, primarily due to the unfavorable impact of foreign currency translation, divestitures, and the exit of its remaining business in Russia.

Despite these headwinds, PPG’s income before income taxes was $502 million, a decrease of $40 million compared to the first quarter of 2024. This was mainly driven by the unfavorable impact of foreign currency translation and inflationary pressures on materials, wages and other costs, partially offset by higher selling prices.

Segment Performance

PPG operates three main business segments: Global Architectural Coatings, Performance Coatings, and Industrial Coatings. Here’s a breakdown of their performance in the first quarter:

Global Architectural Coatings

• Net sales decreased 11.3% due to unfavorable currency translation, lower sales volumes, and divestitures, partially offset by higher selling prices.
• Segment income decreased 28.9% due to the top-line pressures as well as raw material inflation, partially offset by cost control measures and price increases.
• Looking ahead, the segment expects flat to low single-digit organic sales growth in the second quarter as consumer sentiment in Europe stabilizes and project spending in Mexico resumes.

Performance Coatings

• Net sales increased 6.8% driven by higher sales volumes and selling prices, partially offset by unfavorable currency translation and divestitures.
• Segment income increased 9.2% due to the higher selling prices and volumes, particularly in aerospace, protective/marine, and traffic solutions.
• The segment anticipates continued strength in aerospace and protective/marine coatings, with low to mid-single-digit organic sales growth expected in the second quarter.

Industrial Coatings

• Net sales decreased 8.1% due to divestitures, unfavorable currency, lower selling prices, and slightly lower sales volumes.
• Segment income decreased 13.7% primarily from the lower organic sales, including the impact of lower indexed-based selling prices, partially offset by cost control actions.
• For the second quarter, the segment expects organic sales to decline by a low to mid-single-digit percentage as global industrial production improves but automotive OEM build rates moderate.

Profitability and Cash Flow

PPG’s adjusted earnings per diluted share from continuing operations was $1.72 in the first quarter, down 8.0% year-over-year, primarily due to the unfavorable currency impact and cost inflation. The company’s adjusted effective tax rate was 24.5%.

In terms of cash flow, PPG used $16 million in operating activities in the first quarter, compared to generating $7 million in the prior year period. This $23 million increase in cash used was mainly due to unfavorable changes in working capital. The company’s operating working capital as a percentage of sales increased to 19.3% at the end of the quarter.

PPG invested $168 million in capital expenditures during the quarter, down from $235 million in the prior year period. The company expects total capital spending of $725 million to $775 million in 2025 to support future organic growth.

Financing activities generated $698 million of cash in the first quarter, primarily from the proceeds of new long-term debt issuances, partially offset by treasury stock purchases.

Strengths and Weaknesses

Key strengths for PPG include:

• Diverse portfolio of leading coatings brands and technologies across architectural, automotive, aerospace, and industrial end markets
• Strong market positions and customer relationships in many of its core businesses
• Ongoing focus on productivity improvements and cost control measures
• Solid financial position with ample liquidity and access to capital markets

Weaknesses and challenges include:

• Exposure to macroeconomic and geopolitical headwinds, including foreign currency fluctuations and inflationary pressures
• Reliance on certain key customers and industries, such as automotive OEMs, which can be cyclical
• Competitive landscape with other large global coatings players
• Ongoing costs and liabilities associated with environmental and asbestos-related matters

Outlook and Future Prospects

Looking ahead, PPG expects the current macroeconomic environment to remain dynamic, with continued foreign currency volatility and cost inflation pressures. However, the company believes its diverse portfolio, strong market positions, and focus on productivity will help it navigate these challenges.

In the second quarter of 2025, the company anticipates:

• Aggregate organic sales growth in the range of flat to a low single-digit percentage increase across its segments
• Continued strength in aerospace, protective/marine, and traffic solutions coatings
• Moderation in automotive OEM build rates, partially offset by growth in China and share gains
• Slightly improved industrial production, though still below prior year levels in some regions

Over the longer term, PPG remains focused on driving profitable growth through new product innovation, geographic expansion, and strategic acquisitions. The company is also committed to improving its operational efficiency and sustainability efforts to enhance its competitive position and create value for shareholders.

Overall, while PPG faces near-term headwinds, the company’s diversified business model, strong market positions, and disciplined management provide a solid foundation for weathering the current environment and positioning the company for future success.