PPG sales, income fall in Q2

Firm still hurting from loss of Lowe’s account

PPG said second- quarter sales and income fell as the global paints and coatings maker took a hit from restructuring charges, the loss of the Lowe’s retail account, and unfavorable foreign exchange rates.

Net sales totaled just over $ 4 billion, down 3% from the second quarter of 2018.

The Downtown- based company said about $ 60 million of the sales drop resulted from home improvement chain Lowe’s making rival paint maker SherwinWilliams its exclusive supplier in early 2018.

In a conference call with analysts Thursday, Michael McGarry, PPG’s chairman and chief executive, said the company is on track to recover from the loss beginning in the third quarter.

Asked about reports that PPG may emerge as a bidder for Philadelphiabased Axalta Coating Systems, which makes automotive paints, Mr. McGarry declined comment.

Axalta, backed by Warren Buffet’s Berkshire Hathaway, said in June it would review strategic alternatives including a sale.

Shares in PPG closed Thursday at $ 117, up 39 cents.

Negative currency rates impacted second- quarter sales by about $ 130 million.

Net income was $ 270 million, or $ 1.13 per share, down from $ 371 million, or $ 1.51 per share a year ago.

Income adjusted for onetime charges was $ 441 million, or $ 1.85 per share, beating Wall Street analysts’ average estimate by 2 cents. Adjusted income included an after- tax charge of $ 133 million, or 56 cents, for business restructuring.

While industrial and automotive coatings experienced weak global demand, sales of paints used for airplanes and ships improved in the quarter, PPG said.

PPG benefited from higher selling prices and its ongoing cost management program, Mr. McGarry said.

The cost restructuring program is expected to save the company $ 125 million annually.

Recent acquisitions, including coatings businesses SEM, Whitford and Hemmelrath, are exceeding projections and will generate about $ 400 million in annual revenue, Mr. McGarry said.

The company expects sluggish demand in some markets to continue and is projecting earnings of between $ 1.57 and $ 1.67 per share in the third quarter.

For the full year, PPG is targeting adjusted earnings to grow by 7% to 10% and sales to grow by a low singledigit percentage, excluding any impact from foreign currency rates.