PPG Reports Third Quarter 2021 Financial Results

PPG has reported third quarter net sales of nearly US$4.4 billion ($5.9 billion) –  about 19 per cent higher than the prior year.

Organic sales growth led by higher selling prices of nearly six per cent, despite increased supply disruptions that negatively impacted sales and manufacturing and raw material cost inflation of around 25 per cent year-over-year.

Other components of year-over-year net sales change include two per cent lower sales volumes, 13 per cent acquisition-related sales and two per cent favourable foreign currency translation.

Performance Coatings net sales of US$2.76 billion ($3.66 billion) increased 23 per cent over Q3 2020, primarily due to acquisition-related sales and selling price increases across all businesses. Selling prices rose five per cent and acquisition-related sales were up 17 per cent, while sales volume decreased one per cent. Automotive refinish coatings demand improved in the US but remained subdued in the EMEA region.

Industrial Coatings net sales increased 13 per cent to US$1.61 billion ($2.14 billion) over the corresponding period last year, though net income was down 45 per cent. Sales volumes dropped four per cent, while selling prices rose seven per cent and acquisition-related sales increased eight per cent. Automotive OEM coatings sales volumes were down a high-teen percentage, but remained above automotive industry production rates.

“As we communicated in early September, supply-chain disruptions worsened during the quarter as various commodity and component shortages restricted both our manufacturing output and that of certain customers,” said Chairman and CEO Michael McGarry. “While overall demand remained robust during the quarter, these increased disruptions prevented us from completely fulfilling our strong order books. Throughout the quarter, we continued to prioritise selling price increases and we delivered six per cent price realisation for the quarter, led by the Industrial Coatings reporting segment.

“Several of our businesses, including automotive refinish, protective and marine, and packaging coatings delivered above-market volume performance despite the procurement challenges.”

Looking ahead, McGarry said while economic demand remains strong on an aggregate basis, PPG expects ongoing supply chain disruptions to continue throughout Q4, with potential further impacts from the recent industrial production curtailments in China.

“We expect these disruptions to ease slightly in overall quantity and magnitude as the quarter progresses. We will continue to prioritise selling price increases and expect realisation to be sequentially higher in the fourth quarter. The pace of our price realisation continues to be well ahead of the most recent raw material inflation cycle in 2017-2018, which should allow us to fully offset aggregate raw material cost inflation in early 2022.

“In addition, the anticipated recovery of the automotive original equipment manufacturer, aerospace, and automotive refinish coatings businesses, which collectively accounted for about 40 per cent of our pre-pandemic sales, will be a significant catalyst for growth in 2022. As always, we will continue to aggressively manage all aspects of our cost structure,” McGarry said.