PPG releases financial report for the third quarter of 2021

· A record net sales of nearly 4.

· Driven by rising sales prices, organic sales increased by nearly 6%

· Diluted earnings per share is 1.

· Increased supply chain disruption has a negative impact on sales and manufacturing costs

· The cost of raw materials has risen by about 25% year-on-year

· The company plans to implement stock repurchase in the fourth quarter and continue to evaluate potential complementary acquisition opportunities

Pittsburgh—(BUSINESS WIRE)—PPG (NYSE:PPG) recently announced its third quarter 2021 earnings report

Message from the Chairman of the Board and Chief Executive Officer

PPG Chairman and CEO Michael H.

As we mentioned at the beginning of September, the shortage of various raw materials and components has affected the production of ourselves and some of our customers, and the supply chain disruption has further deteriorated this quarter

Despite facing many challenges on the supply side, various businesses including automotive refinish, industrial protective and marine coatings, and packaging coatings have achieved higher-than-market sales performance

Looking ahead, although overall economic demand remains strong, we expect that the supply chain disruption will continue throughout the fourth quarter, and the recent restrictions on production by Chinese industrial companies may have a further impact

Finally, I am proud of all PPG employees

Performance of each business unit in the third quarter of 2021

• Functional Coatings Business Unit

Functional Coatings Business Unit

The growth in net sales of the functional coatings business unit mainly came from acquisition-related sales and price increases for all businesses

Due to rising raw material costs and declining sales volume, the functional coatings business unit's net profit was lower than the same period last year, but its impact was partially offset by price increases, acquisition-related gains, and restructuring cost savings

• Industrial Coatings Business Unit

Industrial Coatings Business Unit

The increase in net sales of the industrial coatings business sector mainly came from acquisition-related sales and the increase in selling prices of all businesses, and was also dragged down to a certain extent by the decline in sales

The net profit of the industrial coatings business unit was lower than that of the same period last year, mainly due to the increase in raw material costs and the decline in sales of automotive OEM coatings, but the impact was partially offset by price increases and restructuring cost savings

Other financial information

• As of the end of the third quarter, the company’s total cash and short-term investments were approximately US$1.

  
  

• Operating expenses in the third quarter were US$45 million, lower than expected, mainly due to a decrease in incentive compensation expenses

  
  

• The business restructuring plan has achieved cost savings of approximately US$35 million and is expected to achieve cost reductions of approximately US$135 million in 2021

  
  

•  The effective tax rate for the third quarter was approximately 22%

  
  

As of the end of the third quarter, the company’s total cash and short-term investments were approximately US$1.
3 billion, and net debt was US$5.
5 billion, a decrease of US$400 million from the second quarter of 2021, consistent with the company’s previous commitment to reduce debt after the acquisition.

.

Operating expenses in the third quarter were US$45 million, lower than expected, mainly due to a decrease in incentive compensation expenses
.

The business restructuring plan has achieved cost savings of approximately US$35 million and is expected to achieve cost reductions of approximately US$135 million in 2021
.

 The effective tax rate for the third quarter was approximately 22%
.

Performance Outlook

Based on the current global economic situation, the continuous production restrictions of customers caused by global chip shortages, the shortage of paint raw materials, and the recent economic uncertainty caused by the new crown epidemic, the company has made the following results for the fourth quarter and full year of 2021 predict:

• Cumulative net sales decreased by 8% to 10% year-on-year

• Operating expenses are approximately US$50-55 million

• Net interest expense is US$25-27 million

• The effective tax rate is about 20%

• Adjusted diluted earnings per share for the full year are between US$6.
  67 and US$6.
  73

Cumulative net sales decreased by 8% to 10% year-on-year

Operating expenses are approximately US$50-55 million

Net interest expense is US$25-27 million

The effective tax rate is about 20%

Adjusted diluted earnings per share for the full year are between US$6.
67 and US$6.
73

The detailed third quarter financial report and related information have been published on the company's investor relations website
.