PPG Sinks After Warning on Materials Costs, Weaker China Demand

(Bloomberg) -- PPG Industries Inc. tumbled after saying third-quarter earnings would lag analysts’ estimates because of rising costs and weaker demand for its paints.

Accelerating increases in raw-materials and transportation expenses are eroding profit, the Pittsburgh-based company said in a statement Monday. At the same time, demand in China is softening and sales of automotive paints are weakening.

Key Insights

  • PPG’s warning spotlights some of Wall Street’s biggest worries for industrial companies ahead of this month’s rush of earnings reports: cost inflation for materials and shipping, and sales in China amid rising trade tensions with the U.S.
  • The company statement, issued 10 days ahead of its official earnings release, suggests a sense of urgency in telling investors that the performance is falling short of expectations. Chief Executive Officer Michael McGarry said he was “disappointed” with the results.
  • A stronger dollar is another source of pain. Weakening currencies, especially in emerging markets, resulted in a $15 million decrease in income, PPG said.

Market Reaction

  • PPG dropped as much as 11% after the market closed. The shares had tumbled 6.2 percent this year through the close.

Get More

  • For details of PPG’s third-quarter forecast, click here
PPG Sinks After Warning on Materials Costs, Weaker China Demand

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