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 Management. The Pittsburgh-based company also makes products for
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.
Corrections & Amplifications
The U.S. manufacturing sector has contracted for five straight months through December, according to the Institute for Supply Management. An earlier version of this article incorrectly described it as the Institute for Supply Chain Management. (Jan. 16, 2020)
Write to Austen Hufford at [email protected]
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