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PPG Industries (PPG) Issues Q3 Sales Update, Withdraws Guidance

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PPG Industries, Inc. (PPG - Free Report) recently announced that it expects sales volumes for the third quarter of 2021 to be $225-$275 million lower than its initial estimated figures. Increasing disruptions in commodity supplies, continued reductions in customer production mainly due to shortages in semiconductor chips, and logistics and transportation challenges in many regions including the United States, Europe, and China have dealt a blow to the company’s sales volumes.

Moreover, raw material inflation for the third quarter is higher by $60 million to $70 million than the previously announced figures. The uncertainty and volatility have led the company to withdraw its previously communicated financial guidance for the third quarter and full-year 2021.

The supply disruptions in coatings commodity have further worsened since PPG’s earnings announcement on Jul 19, 2021, due to several additional unforeseen declarations and lower material allocations from certain suppliers. Also, Hurricane Ida could inflict additional supply chain woes and the company is continuously monitoring the probable impacts.

The company noted that aggregate global economic demand has remained healthy and many of its end-use channels have low inventories. With the normalization of supply conditions, strong sales growth is expected in 2022. PPG is making measurable progress by implementing selling price increases to offset the elevated raw material costs. Overall price increases for the third quarter are estimated to be about 5% with similar contributions from both operating segments.

Shares of PPG have jumped 20% over a year compared with the industry’s 22.8% rise.

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Zacks Ranks & Stocks to Consider

Currently, PPG has a Zacks Rank #4 (Sell).

Better-ranked stocks in the basic materials space include Avient Corporation (AVNT - Free Report) , BASF SE (BASFY - Free Report) each flaunting a Zacks Rank #1 (Strong Buy), and The Chemours Company (CC - Free Report) with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Avient has a projected earnings growth rate of 75.1% for the current year. The company’s shares have surged 76.3% in a year.

BASF has a projected earnings growth rate of 96.7% for the current year. The company’s shares have rallied 19.1% in a year.

Chemours has a projected earnings growth rate of roughly 86.4% for the current year. The company’s shares have grown 58.2% in a year.


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