By Austen Hufford
PPG Industries Inc. said it expects paint and coatings sales volumes to decline by about one-third in its second quarter, with factories closed and people driving and flying less due to the coronavirus pandemic.
The Pittsburgh-based manufacturer of paints and coatings for houses, cars and planes on Monday withdrew its guidance for the year. PPG said the pandemic hurt sales by $225 million in its first quarter, leading to a 6.8% decline in total sales of $3.38 billion, below what analysts expected.
"Our first quarter results reflect a sudden and wide-ranging deterioration in global demand," Chief Executive Michael McGarry said.
Shares in PPG fell 2% after hours.
PPG said sales of paint for cars and planes declined as production stopped at major manufacturers. Fewer miles traveled meant less wear and tear on vehicles. Mandated paint store closures in some areas as the virus spread also hurt sales in March, PPG said.
In response to the decline in demand, PPG said it was speeding up cost cuts that would now result in savings of up to $90 million this year, up from $75 million expected previously.
PPG also said it had taken out loans to boost its cash position. The company ended March with $1.9 billion in cash and short-term investments, up from $1.3 billion at the end of 2019. In April, the company entered into an additional $1.5 billion credit facility.
PPG reported a profit of $243 million, or $1.02 a share, for the quarter, down from $312 million, or $1.31 a share for the same period a year earlier. On an adjusted basis, the company brought in $1.19 a share in earnings, above the $1.17 expected by analysts.
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