PPG has announced that it expects third quarter 2022 adjusted earnings per diluted share to be between five per cent and seven per cent below the low end of the company’s forecasted range of US$1.75 to US$2 that was communicated in July.
In comparison to its forecast at the beginning of the third quarter, company sales were impacted by further softening demand in Europe. Additionally, sequential quarterly demand recovery was lower than expected in China due to a resumption of pandemic-related restrictions. Sales volume declines were most pronounced in September and resulted in a reduction in the earnings benefit from higher selling prices and reduced manufacturing efficiencies versus the prior forecast.
PPG expects softer demand conditions to continue into the fourth quarter, along with continued higher levels of unfavourable foreign currency translation impact. Raw material cost inflation remains at historically elevated levels but has begun to moderate in some regions.
The company expects selling prices to rise by between 10 per cent and 12 per cent compared to the prior-year fourth quarter, and up between 18 per cent and 20 per cent on a two-year stacked basis. PPG anticipates fourth quarter year-over-year segment earnings growth of near 20 per cent, as year-over-year segment margin recovery momentum accelerates.
Reported fourth quarter 2021 earnings per diluted share were US$1.12 and adjusted earnings per diluted share were US$1.26. The reported and adjusted figures included a US$0.20 benefit from a lower tax rate related to favourable discrete items that are not expected to recur in the fourth quarter of 2022.