PPG Earnings: Volume and Selling Price Growth Remain Mixed Amid Macro Uncertainty

Narrow-moat PPG reported solid first-quarter results that were in line with our expectations. Net sales fell 4% year over year, but this was mainly driven by divestitures and foreign-currency translation. Organic sales rose 1% year over year due to higher performance coatings volumes in the quarter. End-market demand remains mixed as weakness in architectural and automotive original equipment manufacturer end markets has been somewhat offset by strength in aerospace, marine, and protective. Additionally, heightened economic uncertainty raises some concern for PPG, but PPG’s direct tariff exposure is limited. Much of the paint and coatings produced by PPG are manufactured and sold locally, and raw materials tend to be sourced locally. Where tariffs are unavoidable, PPG will likely pass through increased costs to customers. Nevertheless, a global slowdown in GDP growth could weigh on PPG’s performance coatings-focused portfolio, but the impact remains to be seen. We've decreased our fair value estimate to $119 from $120 per share due to slightly lower near-term revenue in our forecast.