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PPG INDUSTRIES INC

PPG
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Business Summary

PPG Industries, Inc. manufactures and distributes a broad range of paints, coatings and specialty products. The coatings industry is highly competitive and consists of several large firms with global presence and many firms supplying local or regional markets. PPG competes in its primary markets with the world's largest coatings companies, most of which have global operations, and with many regional coatings companies. PPG is a global leader that markets and sells in more than 50 countries.

PPG's business is comprised of three reportable business segments: Global Architectural Coatings, Performance Coatings, and Industrial Coatings. Global competitors named in the filing include Akzo Nobel N.V., Hempel A/S, Nippon Paint, the Jotun Group, The Sherwin-Williams Company, Axalta Coating Systems Ltd., BASF Corporation, Kansai Paints, RPM International Inc., and 3M Company. PPG's competitive factors include product performance, technology, quality, technical and customer service, price, customer productivity, distribution and brand recognition.

PPG generates revenue by manufacturing and distributing a broad range of paints, coatings and specialty products. The company supplies paints, coatings and specialty products to customers serving a wide array of end-uses, including industrial equipment and components; packaging material; aircraft and marine equipment; automotive original equipment; automotive refinish and aftermarket; pavement marking products; as well as coatings for other industrial and consumer products. PPG also serves commercial and residential new build and maintenance customers by supplying coatings to painting and maintenance contractors and directly to consumers for decoration and maintenance.

The Global Architectural Coatings segment primarily supplies a variety of decorative coatings, adhesives, sealants and finishes along with paint strippers, stains and related chemicals. This segment leverages leading trusted brands and its world-class distribution networks to provide sustainable DIY, trade and retail high-performance solutions. Net sales for this segment were $3,838 million in 2025 and $3,921 million in 2024. Segment income was $599 million in 2025 and $678 million in 2024. The Performance Coatings segment primarily supplies a variety of protective coatings, adhesives, sealants and finishes along with pavement marking products and related chemicals, transparencies and paint films. Net sales for this segment were $5,513 million in 2025 and $5,237 million in 2024. Segment income was $1,148 million in 2025 and $1,142 million in 2024. The Industrial Coatings segment primarily supplies a variety of protective and decorative coatings and finishes along with adhesives, sealants, metal pretreatment products, optical monomers and coatings, low-friction coatings and other specialty products. Net sales for this segment were $6,524 million in 2025 and $6,687 million in 2024. Segment income was $875 million in 2025 and $893 million in 2024.

In 2024, PPG completed the sale of 100% of its architectural coatings business in the U.S. and Canada to American Industrial Partners, receiving $516 million in proceeds and recording a loss on the sale of $285 million . In 2024, PPG also completed the sale of its silicas products business for $325 million in proceeds and recorded a pre-tax gain on the sale of $129 million . In October 2024, the Company approved a comprehensive cost reduction program with anticipated annualized pre-tax savings of approximately $175 million once fully implemented. In 2025, the Company recognized pretax net impairment and other related charges of $24 million related to a consolidated joint venture in the Performance Coatings segment. In 2025, the Company used $790 million to repurchase shares of PPG stock. The Company raised its per-share quarterly dividend by approximately 5% to $0.71 per share in July 2025. In March 2025, PPG completed a public offering of €900 million 3.250% Notes due 2032, with aggregate cash proceeds of $940 million . In October 2025, PPG completed a public offering of $700 million 4.375% Notes due 2031, with aggregate cash proceeds of $693 million .

Net sales of approximately $15.9 billion in 2025 were flat compared to 2024, with higher selling prices, sales volume growth and favorable foreign currency translation offset by the impact of divestitures. Income before income taxes was $2,045 million in 2025, an increase of $193 million compared to the prior year. Net income attributable to PPG was $1,576 million in 2025, compared to $1,116 million in 2024. Earnings per diluted share from continuing operations was $6.92 in 2025, compared to $5.72 in 2024. Cash from operating activities - continuing operations was $1,936 million in 2025, compared to $1,391 million in 2024.

Business Outlook

In 2026, the Company anticipates demand in Europe and in global industrial end-use markets to remain challenged. Despite the macroeconomic environment, PPG expects growth will be driven by aerospace coatings and architectural coatings in Mexico as well as share gains in its Industrial Coatings segment, resulting in organic sales growth in the range of flat to a positive low single-digit percentage. The 2026 effective tax rate from continuing operations is expected to be in the range of 24% to 25% , varying by quarter.

PPG's aerospace coatings business is experiencing a customer order backlog of approximately $315 million , even with improved production and other productivity gains. Global international and domestic air travel improved year over year, and passenger air traffic is forecasted to grow 5% in 2026. As demand for PPG's technology-advantaged products grows, the Company remains focused on debottlenecking and further expanding manufacturing capabilities to drive additional sales volume and earnings growth.

In the first quarter 2026, demand in Mexico is expected to be strong and consumer sentiment in Europe is expected to be tepid. First quarter 2026 organic sales for the Global Architectural Coatings segment are anticipated to increase in the range of by a low single-digit percentage to a mid-single-digit percentage compared to the first quarter 2025. In the first quarter 2026, continued strength in aerospace coatings is anticipated. Protective and marine coatings will begin to lap prior year share gains resulting in growth similar to the industry. In automotive refinish coatings, PPG anticipates lower organic sales due to customer order patterns and low industry demand. First quarter 2026 organic sales for the Performance Coatings segment are anticipated to be within the range of down by a low single-digit percentage to flat compared to the first quarter 2025. In the first quarter 2026, global industrial production is expected to remain at a relatively low level with the potential for slight improvement in the United States, Europe and the Asia-Pacific region and lower demand in Latin America. First quarter 2026 organic sales for the Industrial Coatings segment are anticipated to be within the range of down by a low single-digit percentage to flat compared to the first quarter 2025.

Total restructuring savings were approximately $75 million in 2025 and the Company expects approximately $50 million in incremental savings in 2026. The multi-year program is focused on reducing structural costs primarily in Europe and in certain other global businesses, along with other corporate costs following the divestitures of PPG's silicas products business and the architectural coatings business in the U.S. and Canada. In 2026, raw material costs are expected to continue to remain relatively flat compared to 2025. Additionally, PPG expects manufacturing efficiencies to improve as the year progresses.

During 2026, capital expenditures, which are expected to be approximately $650 million to $700 million , will support future organic growth opportunities. The Company expects strong cash generation in 2026. Based on recent exchange rates, PPG expects that foreign currency exchange rates will have a slightly favorable impact on net income from continuing operations in 2026.

In 2025, the Company deployed $778 million for capital expenditures and $628 million for dividends. The Company ended the year with approximately $2.0 billion remaining under its current share repurchase authorization. PPG ended 2025 with approximately $2.2 billion in cash and short-term investments.

In 2026, raw material costs are expected to continue to remain relatively flat compared to 2025. The Company will carefully monitor all costs during 2026 and assess the need for additional selling price increases. Based on recent exchange rates, PPG expects that foreign currency exchange rates will have a slightly favorable impact on net income from continuing operations in 2026; however, the Company generally purchases raw materials, incurs manufacturing costs and sells finished goods in the same currency, which reduces foreign currency transaction-related impacts to net income.

The 2026 effective tax rate from continuing operations is expected to be in the range of 24% to 25% , varying by quarter. This range is the Company's best estimate and represents an increase compared to the 2025 adjusted effective tax rate driven by higher rates in certain countries, including the impact of global minimum tax standards, and the geographic mix of earnings.

Risk Factors

PPG's financial results are significantly affected by the cost of raw materials, which represent the single largest production cost component. If raw material costs increase and PPG is unable to offset these higher costs in a timely manner, Income from continuing operations and Cash from operating activities would be adversely impacted. The Company is exposed to foreign currency exchange rate risk; during 2025, approximately 70% of the Company's total net sales were recognized outside of the United States. The industries in which PPG operates are highly competitive, and an increase in competition may cause PPG to lose market share or lose customers, adversely impacting sales volumes, or compel PPG to reduce prices, resulting in reduced margins. PPG's aerospace coatings business is currently experiencing a backlog resulting in product shortages to certain customers, and if PPG fails to meet production targets and commitments, it could have an adverse effect on its reputation, business, operating results, or financial condition. The Company is subject to existing and evolving standards relating to the protection of the environment, and as of December 31, 2025, PPG had $206 million reserved for environmental remediation efforts, with reasonably possible unreserved losses estimated to be approximately $100 million to $200 million .

Management Priorities

Management's tone in the MD&A is one of resilience and cautious optimism, highlighting that during 2025 PPG demonstrated resilience in a challenging macroeconomic environment by growing both selling prices and sales volumes and generating $1.9 billion in operating cash flow. Key strategic priorities emphasized include reducing costs and improving profitability through the global restructuring programs, with anticipated annualized pre-tax savings of approximately $175 million once fully implemented, and focusing on technology-advantaged products and services to drive growth. Management stated that in 2026, PPG expects growth will be driven by aerospace coatings and architectural coatings in Mexico as well as share gains in its Industrial Coatings segment, resulting in organic sales growth in the range of flat to a positive low single-digit percentage.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Performance of Reportable Business Segments
  2. [2] Item 7, MD&A — Performance of Reportable Business Segments
  3. [3] Item 7, MD&A — Performance of Reportable Business Segments
  4. [4] Item 7, MD&A — Performance of Reportable Business Segments
  5. [5] Item 7, MD&A — Performance of Reportable Business Segments
  6. [6] Item 7, MD&A — Performance of Reportable Business Segments
  7. [7] Item 7, MD&A — Performance of Reportable Business Segments
  8. [8] Item 7, MD&A — Performance of Reportable Business Segments
  9. [9] Item 7, MD&A — Performance of Reportable Business Segments
  10. [10] Item 7, MD&A — Performance of Reportable Business Segments
  11. [11] Item 7, MD&A — Performance of Reportable Business Segments
  12. [12] Item 7, MD&A — Performance of Reportable Business Segments
  13. [13] Item 8, Note 2 — Divestitures
  14. [14] Item 8, Note 2 — Divestitures
  15. [15] Item 8, Note 2 — Divestitures
  16. [16] Item 8, Note 2 — Divestitures
  17. [17] Item 7, MD&A — Review and Outlook
  18. [18] Item 8, Note 7 — Impairment and Other Related Charges, Net
  19. [19] Item 7, MD&A — Share repurchase activity
  20. [20] Item 7, MD&A — Dividends paid to shareholders
  21. [21] Item 8, Note 10 — Borrowings and Lines of Credit
  22. [22] Item 8, Note 10 — Borrowings and Lines of Credit
  23. [23] Item 8, Note 10 — Borrowings and Lines of Credit
  24. [24] Item 8, Note 10 — Borrowings and Lines of Credit
  25. [25] Item 7, MD&A — Highlights
  26. [26] Item 7, MD&A — Highlights
  27. [27] Item 7, MD&A — Highlights
  28. [28] Item 8, Consolidated Statement of Income
  29. [29] Item 8, Consolidated Statement of Income
  30. [30] Item 7, MD&A — Effective tax rate and earnings per diluted share
  31. [31] Item 7, MD&A — Effective tax rate and earnings per diluted share
  32. [32] Item 7, MD&A — Cash from operating activities - continuing operations
  33. [33] Item 7, MD&A — Cash from operating activities - continuing operations
  34. [34] Item 7, MD&A — Review and Outlook
  35. [35] Item 7, MD&A — Performance of Reportable Business Segments, Performance Coatings
  36. [36] Item 7, MD&A — Performance of Reportable Business Segments, Performance Coatings
  37. [37] Item 7, MD&A — Review and Outlook
  38. [38] Item 7, MD&A — Review and Outlook
  39. [39] Item 7, MD&A — Capital expenditures, including business acquisitions
  40. [40] Item 7, MD&A — Review and Outlook
  41. [41] Item 7, MD&A — Review and Outlook
  42. [42] Item 7, MD&A — Review and Outlook
  43. [43] Item 7, MD&A — Review and Outlook
  44. [44] Item 7, MD&A — Review and Outlook
  45. [45] Item 1A, Risk Factors — Operational and Strategic Risks
  46. [46] Item 1, Business — Environmental Matters
  47. [47] Item 1, Business — Environmental Matters
  48. [48] Item 7, MD&A — Review and Outlook
  49. [49] Item 7, MD&A — Review and Outlook
  50. [50] Item 8, Consolidated Statement of Income
  51. [51] Item 8, Consolidated Statement of Income
  52. [52] Item 8, Consolidated Statement of Income
  53. [53] Item 8, Consolidated Statement of Income
  54. [54] Item 8, Consolidated Statement of Income
  55. [55] Item 8, Consolidated Statement of Income
  56. [56] Item 8, Consolidated Statement of Income
  57. [57] Item 8, Consolidated Statement of Income
  58. [58] Item 8, Consolidated Statement of Cash Flows
  59. [59] Item 8, Consolidated Statement of Cash Flows
  60. [60] Item 7, MD&A — Effective tax rate and earnings per diluted share
  61. [61] Item 7, MD&A — Effective tax rate and earnings per diluted share
  62. [62] Item 7, MD&A — Regulation G Reconciliations - Results from Operations
  63. [63] Item 7, MD&A — Regulation G Reconciliations - Results from Operations
  64. [64] Item 7, MD&A — Regulation G Reconciliations - Results from Operations
  65. [65] Item 7, MD&A — Regulation G Reconciliations - Results from Operations
  66. [66] Item 7, MD&A — Regulation G Reconciliations - Results from Operations
  67. [67] Item 7, MD&A — Regulation G Reconciliations - Results from Operations
  68. [68] Item 7, MD&A — Regulation G Reconciliations - Results from Operations
  69. [69] Item 7, MD&A — Performance of Reportable Business Segments, Global Architectural Coatings
  70. [70] Item 7, MD&A — Performance of Reportable Business Segments, Performance Coatings
  71. [71] Item 7, MD&A — Performance of Reportable Business Segments, Industrial Coatings

Analysis on 6/21/2026