PPG recently reported financial results for the first quarter of 2023, posting record net sales of approximately $4.4 billion. Organic sales grew more than 5% versus the prior year, led by higher selling prices. Reported earnings per diluted share (EPS) was $1.11, and adjusted EPS was $1.82. According to PPG, supply disruptions are moderating and manufacturing operations are improving. 

In the first quarter of 2023, the Performance Coatings segment’s net sales increased approximately 2% to $2,628 million (2022: $2,570 million), as higher selling prices in all businesses more than offset lower sales volumes, the impact of divestitures, the wind down of business in Russia, and unfavorable foreign currency translation. Segment income increased by 24% versus the prior year primarily due to higher selling prices, which more than offset aggregate cost inflation and the impact of lower sales volumes.

Industrial Coatings net sales increased modestly in the first quarter of 2023, as higher selling prices across all businesses were partially offset by lower sales volumes, unfavorable foreign currency translation, and the wind down of business in Russia. Sales were up 1% versus the prior-year quarter at $1,752 million (2022: $1,728). Segment income was higher than the prior year by $100 million mainly due to higher selling prices focused on margin recovery, partially offset by lower sales volumes.

Tim Knavish, PPG president and chief executive officer, commented on the quarter, “As we communicated earlier this month, the pace of our operating margin recovery accelerated during the quarter, which drove a 33% year-over-year increase in adjusted EPS. Our improving results are despite macroeconomic conditions that remain challenging and reflect the strengths of our diverse business portfolio and progress we are making on restoring margins in line with our historical profile.

“While the global demand environment generally remained consistent with our prior expectations, several businesses outperformed our original forecast and their respective markets. These include the aerospace coatings business and our Latin America region, each delivering record sales in the first quarter. In addition, our automotive original equipment manufacturer (OEM) coatings business benefited from solid global production growth and remains well positioned. Finally, our latest customer win in the U.S. architectural business provided a higher load-in benefit than originally projected.

“Our strong earnings growth was across most business units and was aided by higher incremental margins that were driven by higher selling prices, improving manufacturing efficiencies and overall cost discipline. These factors also resulted in record first quarter operating earnings in our Europe, Middle East and Africa (EMEA) region.

“Looking ahead, we anticipate the macro environment will generally remain consistent with the first quarter, with continued stabilization of economic activity (at lower absolute levels) in Europe and modestly improving demand in China. In the U.S., we expect sequential slowing in economic activity in certain end-use markets, particularly those that are construction-related. Supply chain disruptions are abating, and we are already experiencing and expect further increases in commodity raw material availability. We remain highly focused on partnering with our customers and delivering superior service and products with a focus on enhancing their productivity and sustainability. Finally, along with additional organic growth, we are executing and delivering on our previously announced restructuring actions and acquisition-related synergies, which collectively will drive additional margin recovery momentum and related operating cash flow.”

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