PPG Industries’ Geographical Revenue Mix

PPG Industries (PPG) is a leading global player in the paint and coatings segment, operating in 70 global locations. In this part, we’ll look at their revenue contributions to PPG Industries’ total revenue. The company’s revenues are classified in the following four regions:

• United States: The United States region is PPG’s largest revenue generator. In 2010, this region’s contribution to PPG’s total revenue was 41.9%. In 2015, it fell marginally to 41.7%. From 2010–2015, PPG reported CAGR (compound annual growth rate) of 2.7%. The US region marginally underperformed with a CAGR of 2.6%, mainly driven by lower demand.
• Other Americas: The other Americas region includes Canada and Latin America. This region’s revenue is the lowest contributor to PPG’s overall revenue. However, the region has grown at a rapid pace since 2010 compared to other regions. In 2010, the other Americas region’s contribution to PPG’s total revenue was 7.8%. In 2015, it increased significantly to 14.6%. The reasons are listed below. Between 2010 and 2015, PPG reported a CAGR of 2.7%, while the other Americas region outperformed with a CAGR of 16.6%.

• EMEA: The EMEA (Europe, the Middle East, and Africa) region is the second-largest revenue generator for PPG Industries. In 2010, the region’s contribution to PPG’s total revenue was 33.8%. In 2015, its contribution fell to 27.9%. The decline is mainly attributed to a lower growth rate for the region. From 2010 to 2015, the region grew at a CAGR of -1.2%, underperforming PPG’s overall CAGR growth of 2.7%.
• Asia Pacific: The Asia Pacific region is PPG’s third-largest revenue generator. In 2010, the region contributed 16.5% to PPG’s total revenue. In 2015, the contribution fell marginally to 15.9%. From 2010 to 2015, the region grew at a CAGR of 1.8%, underperforming PPG’s overall CAGR growth of 2.7%.

In the span of five years from 2010 to 2015, PPG expanded its footprint in the Other Americas region with a number of acquisitions. This led to a higher revenue contribution to PPG’s overall revenue. Below are some of PPG’s acquisitions in the Other Americas region:

• In 2012, PPG acquired AkzoNobel’s North American business.
• In 2012, PPG acquired Colpisa, a Columbian automotive coatings producer.
• In 2014, PPG acquired Comex, a leading architectural coatings company in Mexico.
• In 2015, PPG acquired the complete stake in Chemfil Canada and Consorcio Latinoamericano.

You can indirectly hold PPG Industries by investing in the iShares US Basic Materials ETF (IYM). IYM held 5.2% of its portfolio in PPG Industries as of August 26, 2016. IYM’s top holdings include Dow Chemical (DOW), Monsanto (MON), and Praxair (PX), with weights of 10.7%, 8.4%, and 6.1%, respectively.