PPG has posted record quarterly net sales of US$4.9 billion for Q2 2023, driven in part by record quarter sales of automotive refinish coatings.
Organic sales grew four per cent year-over-year (YOY), led by higher selling prices, while quarterly earnings per diluted share (EPS) was also a record at US$2.06 and an adjusted EPS of US$2.25. The company reported significant progress on margin recovery with segment margins up 330 basis points YOY, in addition to strong year-to-date operating cash flow of about US$620 million, up about US$750 million YOY.
Tim Knavish, PPG President and Chief Executive Officer, said the record sales and earnings were driven by the company’s diverse portfolio.
“While overall global industrial demand was lacklustre, several of our technology-advantaged businesses and leading brands once again delivered strong growth. In particular, the Aerospace, Automotive Original Equipment Manufacturer, Automotive Refinish Coatings, and PPG Comex businesses all achieved record sales during the quarter,” said Knavish.
“We made excellent progress in restoring operating margins toward our prior historical profile, as we sharply improved year-over-year segment margins by 330 basis points. Additionally, we demonstrated one of our long-standing legacies of strong cash generation with record operating cash flow for the first half of the year, and we are targeting further working capital improvements in the second half of the year, specifically in raw materials inventory.”
PPG also raised its adjusted EPS guidance for full-year 2023 in consideration of current global economic activity, soft global industrial production, continued economic uncertainty associated with the impact of geopolitical issues in Europe, and higher interest rates in most developed countries. Total organic sales for Q3 2023 are now anticipated to increase by low single digit percentage YOY.
“Looking ahead, we anticipate that the global macroeconomic environment will remain generally consistent with the second quarter including continued tepid global industrial production, along with some incremental slowing in US Architectural Residential Repaint due to significantly lower existing home sales,” said Knavish. “Given the strength and momentum we have experienced year-to-date in several of our businesses, such as Aerospace Coatings and Automotive OEM Coatings, we expect our diverse portfolio mix to provide us with continued resiliency.
“On a regional basis, we anticipate modest sequential demand improvement in China and aggregate European demand to stabilise, albeit at current lower absolute levels. In addition, our supply chain and raw material availability has returned to pre-pandemic levels, and in some instances, there is excess supply.
“As I mentioned at my CEO investor briefing in May, we remain highly focused on our enterprise growth strategy and partnering with our customers to deliver superior service and products with a focus on enhancing their productivity and sustainability. As a result, we expect to achieve more customer success in subsequent quarters.”