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PPG Industries Stock Plummets on Its Revenue Miss

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Jul. 21 2017, Published 3:22 p.m. ET

PPG Industries declares its 2Q17 revenue

PPG Industries (PPG) announced its 2Q17 earnings results before the market opened on July 20, 2017. The company reported 2Q17 revenue of $3.8 billion, a rise of 0.6% year-over-year (or YoY) after accounting for its complete exit from the glass segment. 

However, PPG’s revenue fell $3.9 billion short of analysts’ expectations.

The marginal YoY rise in PPG’s revenue was driven by its improved prices, but the company’s volumes remained flat. PPG’s currency hedging policy still had an adverse impact of 2%, or $65 million, on PPG’s revenue. However, its revenue is expected to improve in the next few quarters at prevailing forex rates.

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CEO’s comments

PPG’s chair and CEO, Michael McGarry, said, “Overall company volumes were flat in the second quarter, which included the effect of our efforts to raise selling prices resulting in us turning away certain business. Year-to-date volume growth is about one percent which is well below our target. This remains a key focus area which we will continue to address.”

Stock price reaction

Wall Street was disappointed with PPG’s revenue, which fell short of analysts’ expectations. PPG stock closed at $106.72, a fall of ~6.0%. PPG’s declaration of a 13% rise in its dividend to $0.45 per share and the announcement of its acquisition of The Crown Group from High Road Capital Partners and Charter Oak Capital Partners failed to boost investors’ sentiments. PPG didn’t disclose the financial details of the acquisition.

In this series, we’ll take a look at PPG’s 2Q17 revenue, earnings, the performances of its reporting segments, and analysts’ views on its stock performance.

Investors looking for exposure to PPG Industries can invest in the Materials Select Sector SPDR ETF (XLB), which has invested 4.6% of its portfolio in PPG. The top holdings of the fund include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON) with weights of 12.4%, 12.2%, and 8.5%, respectively, as of July 20, 2017.

In the next article, we’ll look at PPG’s 2Q17 earnings.

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