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PPG Reports First Quarter 2022 Financial Results

General News
PPG Industries Logo - Supply Service Provider for the Lumber Industry
  • Record first quarter net sales of $4.3 billion, 11% higher than prior year
  • Organic sales growth of about 7%, led by higher selling prices
  • Reported earnings per diluted share (EPS) of $0.08 and adjusted EPS of $1.37
  • Reported results include charges related to operations in Russia of $290 million, primarily non-cash
  • Raw material costs up 25% YOY; energy and transportation costs also elevated
  • Certain supply disruptions moderated during the quarter
  • Completed acquisition of the powder coatings business of Arsonsisi on April 1; balance sheet flexibility remains

Chairman and CEO Comments

Michael H. McGarry, PPG chairman and chief executive officer, commented on the quarter:

We delivered record sales during the quarter despite ongoing supply chain disruptions along with the initial impacts of geopolitical issues in Europe and increasing COVID-19 restrictions in China. Our organic sales growth of 7% was driven by continued selling price realization and above-market sales volume performance in several of our end-use markets, most notably in automotive refinish and PPG-Comex architectural coatings. On a two-year stacked basis, our selling prices are up about 12% over the first quarter 2020 as we continue to manage through persistent and broad inflation. Sales also benefited from our recent acquisitions as Tikkurila and traffic solutions both delivered strong performances.

In addition to further selling price capture, adjusted earnings exceeded our January guidance as we delivered excellent earnings leverage on higher-than-expected sales volumes. The leverage benefits were aided by sequential quarterly improvements in manufacturing performance, including the benefit of more consistent raw material availability. We once again finished the quarter with a much larger than normal order backlog, totaling about $180 million, primarily in automotive refinish and aerospace coatings, and we expect further volume growth in these businesses in the coming quarters.

Looking ahead, aggregate underlying demand for PPG products is expected to remain solid, including continued pandemic-related recovery in certain end-use markets. While supply disruptions are expected to persist, we anticipate further sequential raw material availability improvements driven by increased supplier manufacturing capabilities and labor availability in the U.S., along with lower European demand. Given higher global energy prices, we are implementing further selling price increases in all businesses, and our commercial processes are enabling closer to real-time pricing relative to inflation. We are also developing further cost mitigation actions in the event of broader economic slowdowns. The continuing crisis in Europe and pandemic-related restrictions in China have increased the level of near-term economic uncertainty, as a result our financial guidance for the second quarter considers a wider range of potential earnings outcomes.

I remain optimistic about the number of organic growth opportunities that we are pursuing, increased sales volumes associated with return to normal historical inventory levels in most of our end-use markets and the expected recovery in automotive original equipment manufacturer (OEM) and aerospace coatings, where we have leading global positions. Finally, I want to thank all our global employees who continue to “make it happen” by providing excellent service to our customers and supporting our communities in need during these challenging times.

Performance Coatings net sales increased primarily due to selling price increases across all businesses and acquisition-related sales. While demand remained strong in most end-use markets, raw material availability continued to constrain sales in many businesses, with the largest impacts in architectural coatings Americas and Asia Pacific, traffic solutions, and automotive refinish. As expected, demand for architectural coatings do-it-yourself products continued to moderate in all major regions compared to elevated first-quarter 2021 levels. Sales volumes in the U.S. architectural coatings business benefited modestly from the launch of our recently announced expanded relationship with The Home Depot® in the professional paint channel, but the inventory load-in was constrained due to raw material availability. Automotive refinish net sales grew by a high-single-digit percentage with higher selling prices and sales volumes that continued to outpace industry growth. Aerospace sales volumes were up by a mid-teen-percentage compared to first quarter 2021 levels as after-market demand continued to recover; however, volumes remain nearly 20% below first quarter 2019 pre-pandemic levels. Traffic solutions delivered strong organic sales growth of about 25% compared to the prior year. The recently acquired Tikkurila business represented most of the acquisition-related sales.

Segment income was lower than the prior year, mainly due to raw material, logistics, and energy cost inflation, along with increased manufacturing costs and lower sales volumes, partially offset by higher selling prices coupled with restructuring cost savings. Segment margins improved on a sequential quarterly basis compared to the fourth quarter of 2021.

Industrial Coatings net sales increased primarily due to selling price increases across all businesses and acquisition-related sales, partially offset by lower sales volumes in comparison to strong, pandemic-related volume recovery in the prior year. Most businesses were also impacted by lower economic activity in China due to the Winter Olympics and growing COVID-19 restrictions later in the quarter. Automotive OEM coatings organic sales were up due to higher selling prices partially offset by lower sales volumes, as industry demand was impacted by OEM customer component shortages, geopolitical issues in Europe and production curtailments in China. Industrial coatings organic sales were up a high-single-digit percentage driven by strong selling price realization and solid sales volumes growth in the Americas, partially offset by lower demand in China due to pandemic-related restrictions. Packaging coatings delivered strong organic sales growth led by higher selling prices and continued sales volume strength in the U.S. canned beverage segment. Wörwag, Tikkurila and Cetelon represented the acquisition-related sales.

Segment income was lower than the prior year mainly due to raw material cost inflation, elevated operating costs due to intermittent manufacturing outages early in the quarter and lower sales volumes. These were partially offset by higher selling prices, restructuring cost savings, and acquisition-related earnings. Segment margins improved on a sequential quarterly basis compared to the fourth quarter of 2021.

Additional Financial Information

  • At quarter end, the company had cash and short-term investments totaling about $1 billion. Net debt was $6.1 billion, up by about $600 million from the end of the fourth quarter 2021. Working capital increased, reflecting seasonal trends and raw material inflation.
  • Corporate expenses were $52 million in the first quarter, lower than expected due to lower stock-based incentive compensation expense.
  • Business restructuring programs delivered about $12 million of cost savings.
  • Reported earnings include a pretax charge related to the wind down of most of the company’s operations in Russia of $290 million, primarily non-cash. Net sales in Russia represented approximately 1% of total PPG net sales for both the year ended December 31, 2021, and the first quarter 2022.
  • The company’s reported and adjusted effective tax rates for the first quarter were about 70% and 23%, respectively. The higher reported effective tax rate stems from charges related to the company’s Russian operations, which includes an estimated 9% tax effect.


The company today reported the following projections for the second quarter 2022 based on current global economic activity and in consideration of the near-term economic uncertainty associated with the impact of geopolitical issues in Europe and the continuing pandemic:

  • Aggregate sales volumes down a low-to-mid-single-digit percentage on a year-over-year basis
  • Corporate expenses are expected to be $60 million to $70 million
  • Net interest expense is expected to be $26 million to $30 million
  • Effective tax rate of 23% to 24%
  • Reported EPS of $1.44 to $1.74
  • Adjusted EPS $1.60 to $1.90, excluding amortization expense of $0.14 and costs related to previously approved and communicated business restructuring of $0.02.

A detailed commentary and associated presentation slides related to the first quarter financial information is posted on the company’s investor relations website.

For the full first quarter results, click here.


At PPG, we work every day to develop and deliver the paints, coatings and materials that our customers have trusted for nearly 140 years. Through dedication and creativity, we solve our customers’ biggest challenges, collaborating closely to find the right path forward. With headquarters in Pittsburgh, we operate and innovate in more than 75 countries and reported net sales of $16.8 billion in 2021. We serve customers in construction, consumer products, industrial and transportation markets and aftermarkets. To learn more, visit


Mark Silvey – Corporate Communications – – (412) 434-3046

Source: PPG Industries, Inc.