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PPG Industries to Hike Prices for Automotive OEM Coatings

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PPG Industries to Hike Prices for Automotive OEM Coatings

PPG Industries' (PPG) latest price hike is in response to unprecedented cost pressures in raw materials, distribution and labor as well as freight, across all regions.

PPG Industries, Inc. PPG has declared a global price increase for all automotive original equipment manufacturer (“OEM”) products, which includes adhesives, coatings and sealants. The price hike on an average is 10%, depending on the product line and region. Notably, the changes are effective from Nov 1, 2018 or as contracts permit.

PPG Industries is witnessing unprecedented cost pressures in raw materials, distribution and labor as well as freight, across all regions. Nevertheless, the company is committed to aggressively control expenses. Additionally, it is collaborating with automotive manufacturers to prepare for new vehicle electrification and autonomous driving technologies.

Per the company, the latest move to hike prices is vital to maintain its history of innovating next-generation solutions and boost ability to address customer demand.

The company’s shares have lost 5% in the past three months compared with the industry’s decline of roughly 2.1%.


 

PPG Industries recently provided updates for third-quarter 2018 financial results. The company expects earnings per share (EPS) from continuing operations in the range of $1.47-$1.51 and adjusted EPS in the range of $1.41-$1.45 for the third quarter. Notably, the projected adjusted EPS reflects a decline from $1.90 in the second quarter of 2018 and $1.52 in the third quarter of 2017.

The company stated that the increased inflationary impacts witnessed during the quarter have led to the highest level of cost inflation since the cycle that started two years ago. Moreover, overall demand in China softened during the third quarter. Also, the company experienced weaker automotive refinish sales because several European and U.S. customers have high inventory levels due to lower demand in the end-use market.

Moreover, the impact from weak foreign currencies, primarily from emerging regions, led to a year-over-year decline of $15 million in income, the company noted. Lower demand along with the currency effects impacted the company’s year-over-year earnings. PPG Industries expects the trend to persist for the rest of 2018.

PPG Industries, Inc. Price and Consensus

 

PPG Industries, Inc. Price and Consensus | PPG Industries, Inc. Quote

 

Zacks Rank & Stocks to Consider

PPG Industries currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the basic materials space are Methanex Corporation MEOH, Air Products and Chemicals, Inc. APD and CF Industries Holdings, Inc. CF, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has expected long-term earnings growth rate of 15%. Its shares have surged 59.6% in the past year.

Air Products has expected long-term earnings growth rate of 13.3%. Its shares have gained 7.5% in the past year.

CF Industries has expected long-term earnings growth rate of 6%. Its shares have rallied 57% in a year.

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