PPG Industries Issues Updates On Hurricane Impact, Q3 View

Zacks Investment Research | Oct 02, 2017 08:42AM ET

PPG Industries (NYSE:PPG) provided an update on the impact of the recent natural disasters on its operations and also issued its third-quarter guidance.

The recent hurricanes that originated in the Atlantic Ocean and the earthquakes that occurred in Mexico impacted employees in Texas, Florida and the adjacent states, Mexico, Puerto Rico and other parts of Caribbean. The company reported that though its properties suffered damage, it is on its way to resume operations. Also, the company assumes certain amount of inventory that will not be recoverable. The disruption of supply chain has been the most significant impact from hurricanes. This has had a ripple effect on the company’s operations throughout the United States and Mexico.

The company anticipates the impacts from hurricanes and earthquakes to affect its third-quarter earnings by 5 cents to 10 cents. This includes increased transportation and logistics costs to move raw materials and inventory to avoid PPG Industries’ customer disruptions, increased raw materials costs, facility and inventory damage net of any insurance recoveries, and the impact from lower sales in the affected areas.

PPG Industries expects third-quarter volume growth rate to be above 1.5%, exceeding the growth rate for first-half 2017. In the third quarter, moderate raw material cost inflation was earlier anticipated by the company. As a result of high levels of inflation persisting due to ongoing impacts from supplier outages in Europe and continued mandatory curtailments of raw material production in China, the company expects third-quarter inflation rate to match or possibly exceed the sequentially prior quarter, excluding the hurricane impacts.

Inclusive of the recent business trends and hurricane effects, PPG Industries expect third-quarter earnings per share from continuing operations to be $1.48-$1.55.

PPG Industries has underperformed the

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Written By: Zacks Investment Research

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