Paint Maker PPG Sets Dim Outlook for 2020 -- 2nd Update
January 16 2020 - 5:29PM
Dow Jones News
By Austen Hufford
Paint maker PPG Industries Inc. said its sales this year would
be hurt by weak industrial demand in the U.S. and Europe, as
manufacturers confront global trade tensions and a production drop
at Boeing Co.
PPG supplies Boeing as well as car makers and many other U.S.
manufacturers, a sector that has contracted for five straight
months through December, according to the Institute for Supply
Chain Management. The Pittsburgh-based company also makes products
for Airbus SE and other manufacturers globally.
PPG said Thursday that it generated sales of $3.67 billion in
the fourth quarter, in line with expectations, but said that sales
this year would be affected by new challenges including "lower
production rates by an aerospace customer."
Boeing suspended production of its best-selling 737 MAX this
month, as the jet remains grounded globally following two fatal
crashes. Hundreds of suppliers make parts for the plane. PPG said
it sells its products to many aerospace suppliers.
"We delivered strong year-over-year results in the face of
weakening global manufacturing activity," PPG Chief Executive
Michael McGarry said on a call with analysts.
PPG's shares fell 2.6% to $127.41.
Mr. McGarry said weakness in the production of cars globally and
farm equipment in the U.S. was also hurting the company. He said a
U.S.-China trade deal signed Wednesday could potentially boost
farmer confidence and equipment purchases.
PPG also said industrial demand in China stabilized in the
fourth quarter. Chinese officials have implemented policies to
bolster the economy in recent months.
PPG reported a profit of $292 million, or $1.22 a share, for the
fourth quarter, compared with $258 million, or $1.08 a share, a
year earlier. Its adjusted profit of $1.31 a share was 3 cents
lower than forecasts from analysts polled by FactSet.
The company said had it continued to increase prices to offset
rising raw-material costs.
"Despite the lethargic economic backdrop, our raw material costs
have remained stubbornly high," Financial Chief Vincent Morales
said on a call with investors.
PPG said it expected sales to rise 1% to 3% this year after
adjusting for currency fluctuations. The company forecast per-share
adjusted profit growth of 4% to 9%, a wide range due to what the
company said was heightened economic uncertainty.
In September, PPG reached a settlement with the Securities and
Exchange Commission to close an investigation into accounting
irregularities without paying a fine. In 2018, the company fired
its controller after it uncovered multiple instances of improperly
adjusted financial metrics.
Micah Maidenberg contributed to this article.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
January 16, 2020 17:14 ET (22:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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