On January 30, PPG Industries announced its financial results for the fourth quarter and full year of 2024. The company reported net sales of $15.845 billion for the full year, a 2% decline year-over-year, primarily due to a slight drop in sales volume, unfavorable exchange rates, and divestitures. Sales volume decreased by 1% year-over-year, with growth in Mexico, China, and India, as well as in aerospace coatings, protective and marine coatings, packaging coatings, and traffic solutions, offset by declines in automotive OEM, industrial, and architectural coatings in the EMEA region.
Despite a challenging macroeconomic environment, the company achieved a strong 6% growth in adjusted earnings per share, driven by a favorable business mix and the strong sales of its technologically advanced products and leading brands. Several business segments delivered record-breaking performance, including aerospace coatings, automotive refinish coatings, and architectural coatings in Latin America. The company's net income for 2024 was $1.344 billion, a 10% increase year-over-year, while adjusted net income rose by 5% to $1.848 billion.
PPG reported net sales of $3.729 billion for the fourth quarter, a 5% decline compared to the same period last year due to lower sales, unfavorable foreign exchange rates, and divestitures. Organic sales decreased by 2%, with growth in Mexico, China, and India, as well as in aerospace coatings, protective and marine coatings, and traffic solutions, offset by declines in automotive OEM, industrial, and architectural coatings in the EMEA region.
In the aerospace coatings segment, the company achieved record-high quarterly net sales and segment revenue. It also gained market share in automotive refinish coatings, protective and marine coatings, and traffic solutions. Net income for the quarter was $2 million, a 98% decline year-over-year, while adjusted net income was $375 million, reflecting a 1% increase.
Diluted earnings per share (EPS) was reported at $0.01, while adjusted EPS stood at $1.61, including a $0.05 negative impact from currency conversion due to the depreciation of multiple currencies against the U.S. dollar during the quarter. PPG's combined business segments delivered profit growth, resulting in a segment EBITDA margin of 18%, 30 basis points higher than the previous year's fourth quarter, marking the ninth consecutive quarter of year-over-year margin improvement.
In the fourth quarter, raw material costs remained unchanged compared to 2023 but were still significantly higher than historical levels, despite adequate supply compared to pre-pandemic conditions. The company expects raw material costs to increase at a low single-digit percentage in the first quarter of 2025, primarily due to the impact of implemented tariffs.
PPG Chairman and CEO Tim Knavish commented on the year and the quarter, emphasizing the company's resilience in navigating challenging macroeconomic conditions. Throughout 2024, the company returned value to shareholders by achieving 6% growth in adjusted EPS, improving total segment margin, and generating $1.4 billion in operating cash flow. In the fourth quarter, the company repurchased approximately $250 million in shares, bringing the total for the year to about $750 million, representing approximately 3% of its outstanding shares. Including dividends, PPG returned a total of $1.4 billion to shareholders in 2024.
In 2024, PPG took significant steps to optimize its business portfolio by divesting its silica products and U.S. and Canada architectural coatings businesses. These divestitures enhanced the company’s financial standing, increasing its adjusted EBITDA margin to 18.1%, and sharpened its organizational focus, enabling sustainable organic growth.Organic sales declined by a low single-digit percentage year-over-year in both the fourth quarter and full year. Growth in Mexico, China, and India, as well as in aerospace, protective and marine coatings, and traffic solutions, was offset by declines in automotive OEM, industrial, and architectural coatings in the EMEA region. Despite the lower organic sales, adjusted EPS and total segment EBITDA margin improved in both comparison periods, driven by sales of technologically advanced products, moderate input costs, and structural cost actions.
Adjusted EPS for the fourth quarter was $1.61, including a $0.05 unfavorable currency translation impact. Adjusted full-year EPS for 2024 was $7.87, reflecting a 6% year-over-year increase, excluding a $0.27 EPS impact reclassified as discontinued operations following the divestiture of the U.S. and Canada architectural coatings business, in accordance with U.S. GAAP requirements.
With a revised portfolio, PPG has expanded its segment reporting structure, now reporting all architectural coatings businesses as a separate segment under "Global Architectural Coatings." Reporting for the remaining businesses within the Performance Coatings and Industrial Coatings segments remains unchanged. This enhanced segmentation aims to provide investors with greater visibility as PPG drives business growth and performance.
Looking ahead, CEO Tim Knavish expressed optimism for 2025 and beyond. Given the ongoing challenges in European and global industrial end markets, PPG anticipates a slow start to 2025. Despite the uncertain macroeconomic environment, the company expects full-year organic sales growth in the low single-digit range, with organic growth flat or slightly down in the first quarter but strengthening in the second half of the year, driven by market share gains.
To manage costs effectively, PPG is implementing decisive cost-reduction measures, including global structural cost actions and European manufacturing consolidation. The company's strong balance sheet provides financial flexibility, and it remains committed to creating shareholder value. As part of its capital deployment strategy, PPG plans to allocate approximately $400 million for share repurchases in the first quarter of 2025.
With the recent divestitures and revised portfolio structure, the company now reports all architectural coatings businesses under the newly formed "Global Architectural Coatings" segment. The remaining Performance Coatings and Industrial Coatings segments remain unchanged. This restructuring aims to provide enhanced visibility for investors as the company continues to drive growth and performance.
In a challenging macroeconomic environment, organic sales declined by 2% in Q4 2024. Total sales prices remained stable year-over-year, as structural price increases were offset by declines in certain index-based customer contract prices. Compared to the previous year's fourth quarter, total sales declined by 2%. The Performance Coatings segment saw a 1% increase in sales volume, which was offset by a 2% decline in the Global Architectural Coatings segment, reflecting increasing challenges in global industrial production.
Previously part of the High-Performance Coatings segment, the Global Architectural Coatings division includes Architectural Coatings EMEA and Architectural Coatings Latin America & Asia Pacific.
In Q4 2024, the division reported net sales of $881 million, a 7% year-over-year decrease. The decline was driven by reduced demand in EMEA and a 5% negative currency impact, with a 2% volume decline. Organic sales in Latin America and Asia Pacific remained stable, showing slight growth.
Segment profit stood at $118 million, down 10%, while EBITDA declined 8% to $144 million, mainly due to negative foreign exchange impacts, particularly from the Mexican peso, and lower volumes. Cost-control measures and positive net pricing offset some losses.
Architectural Coatings - EMEAOrganic sales in EMEA declined by a low single-digit percentage compared to last year. Consumer confidence remained weak, with demand varying across countries. In Q4 2023, demand declined across all subregions, but full-year sales improved in Eastern and Central Europe. The company expects European architectural coatings demand in Q1 2025 to be similar to the previous year.
Architectural Coatings - Latin America & Asia PacificOrganic sales were stable but showed slight growth compared to Q4 2023. In Mexico, our franchise network performed well. Organic sales in Latin America and Asia Pacific are expected to grow in Q1 2025.
We anticipate strong demand in Mexico, while European consumer confidence remains moderate. Compared to Q1 2024, the segment's total organic sales are expected to range from flat to low single-digit growth.
The High-Performance Coatings segment includes Aerospace Coatings, Automotive Refinish Coatings, Protective & Marine Coatings, and Traffic Solutions.
In Q4 2024, sales reached $1.262 billion, a 2% increase YoY. Pricing improved 3%, and volumes grew 1%, driven by aerospace, protective & marine coatings, and traffic solutions. The sale of non-North American parts of the traffic solutions business negatively impacted sales by 2%.
Segment profit increased 19% to $259 million, while EBITDA grew 15% to $292 million. EBITDA margin expanded by 260 basis points to 23.1%, supported by price increases and digital technology subscriptions, offset partially by higher costs.
Aerospace CoatingsQuarterly sales reached a record high, with organic sales growing in the double digits compared to Q4 2023. Demand remains strong, with a backlog of approximately $300 million. International and domestic air travel has improved YoY but remains about 3% below pre-pandemic levels.
Automotive Refinish CoatingsOrganic volumes declined by a low single-digit percentage. Sales in the U.S. declined, offset by price increases and reduced industry collision claims. In Europe, organic sales increased slightly, supported by digital technology subscriptions. In China, demand for remanufactured products is recovering and expected to improve in the coming quarters.
Protective & Marine CoatingsDriven by volume growth in Europe and Asia Pacific, organic sales grew by a mid-single-digit percentage. This marked the seventh consecutive quarter of YoY volume growth. The increase was fueled by market share gains in ship repair, reflecting demand for PPG’s sustainable coatings.
Traffic SolutionsOrganic sales increased by a high single-digit percentage YoY, driven by market share gains and favorable weather conditions. Seasonally, sales in Q1 and Q4 are typically lower.
Aerospace and protective & marine coatings are expected to remain strong, while automotive refinish coatings will see price-driven growth. Traffic solutions will follow typical seasonality, benefiting from increased U.S. infrastructure spending. The segment’s organic sales in Q1 2025 are expected to grow by low to mid-single digits. 
The Industrial Coatings segment's net sales for the fourth quarter of 2024 decreased by 9% year-over-year to $1.586 billion. Organic sales declined by 6% compared to the fourth quarter of 2023, driven by lower selling prices and volumes. The decrease in selling prices was due to certain index-based customer contracts. Volumes declined by 4%, with growth in specialty products offset by weak global industrial demand and soft production in the automotive OEM industry. Segment profit was $185 million, a 20% decline year-over-year; EBITDA decreased by 18% to $234 million, and the EBITDA margin dropped by 160 basis points, due to lower volumes and prices from index-based pricing contracts.
Automotive OEM Coatings: Organic sales for automotive OEM coatings decreased by a high single-digit percentage compared to the fourth quarter of 2023, driven by a reduction in sales volumes and lower contract-based index pricing. Volume growth in Latin America and Asia-Pacific was offset by volume declines in the U.S. and Europe. In the U.S. and Europe, production in the automotive industry declined due to reduced demand and extended OEM downtime. In China, industrial vehicle retail sales grew nearly 20% year-over-year, with exports growing almost 20% year-to-date, despite slower export growth in the second half of the year. Industry trends for the first quarter are expected to follow a similar pattern to the fourth quarter, with declines in the U.S. and Europe, and growth in Latin America and Asia-Pacific. The company expects to benefit from its strong position in China and realize stock returns later this year.
Industrial Coatings: Organic sales for industrial coatings declined by a mid-single-digit percentage compared to the previous year, due to volume declines and index-based price reductions. Industrial production remains weak, especially in Europe and the U.S. Sales declines in these regions were partially offset by strong growth in Latin America. Several product categories showed year-over-year sales above early-year levels, including strong growth in consumer electronics and kitchen bakeware. The most notable weaknesses were in heavy equipment, transportation, and declines in wood and coil coatings. Industrial coatings demand is expected to remain challenged, but the first quarter of 2025 will show a slowdown.
Packaging Coatings: Organic sales for packaging coatings decreased by a low single-digit percentage year-over-year, with volume growth in Europe and Latin America offset by lower index prices. Performance was below expectations due to delayed stock return conversions from customer commitments. Global beverage demand remains steady, with PPG's sales growth outpacing the market, reflecting market share growth from both last year and this year. In the Asia-Pacific region, market growth across all categories was strong, and PPG is positioned to support this continued growth. The company expects organic sales in the first quarter to be similar to the fourth quarter, with stock price growth expected later this year.
Global industrial production is expected to face headwinds, remaining at relatively low levels in the first quarter, with improvements in Asia-Pacific and Latin America offsetting soft demand growth in Europe and the U.S. Industrial coatings in China are expected to continue performing well in the next few quarters. Automotive OEM production is expected to decline in the first quarter, but growth in Latin America and Asia-Pacific is anticipated to outperform. Organic total sales for the segment are expected to decrease by a low- to mid-single-digit percentage compared to the first quarter of 2024.
As of the end of the fourth quarter, total cash and short-term investments amounted to $1.4 billion, with net debt totaling $4.5 billion, a decrease of about $30 million from the prior year. Operating cash flow for 2024 was $1.4 billion. This strong cash flow was returned to shareholders through dividends and share repurchases.
Demand from industrial end-use markets in Europe and globally remains challenged. Despite the macroeconomic environment, organic sales growth for 2025 is expected to be in the low single digits, with flat or slightly declining organic growth in the first quarter, and stronger performance in the second half of the year. As announced in October, the company is taking decisive actions to reduce costs, including global structural cost reductions and European manufacturing consolidation. These actions are expected to provide $60 million in pre-tax savings in 2025. A combination of organic sales growth and cost-saving initiatives is expected to result in a total margin increase of approximately 50 basis points for each segment.
The company expects full-year adjusted earnings per share for 2025 to be in the range of $7.75 to $8.05, with a 7% growth in earnings per share at the midpoint, excluding foreign currency translation and higher tax rates. This range is based on current global economic activity and exchange rates, continued weak global industrial production, and mixed demand across regions where the company operates. The company expects annual earnings per share growth to be weighted in the second half of 2025, driven by weak global industrial demand and a stronger U.S. dollar in the second half of 2024. Additionally, the company expects industrial coatings segment annualized share earnings to exceed $100 million starting in the second half of this year.
First Quarter 2025 Assumptions: Total organic sales are expected to decrease by a low single-digit percentage. Organic sales in the global architectural coatings segment are expected to increase in the low single digits; the high-performance coatings segment's organic sales are expected to be in the low- to mid-single-digit percentage range; industrial coatings organic sales are expected to be in the single-digit to low-single-digit percentage range. Total segment margin is expected to decrease by about 150 basis points.
Full Year 2025 Assumptions: Total organic sales are expected to increase by a low single-digit percentage. Organic sales in the global architectural coatings segment are expected to be in the low- to mid-single-digit percentage range. The high-performance coatings segment's organic sales are expected to be in the low- to mid-single-digit percentage range. Industrial coatings organic sales are expected to be flat to low single digits.
