Paint Maker PPG Posts Lower Sales on Weak Industrial Demand

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)

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