PPG reports second quarter 2020 results.

· Net sales in the second quarter were $3 billion, down 25% from the same period last year and down about 22% on the basis of constant exchange rates; Diluted earnings per share from continuing operations were $0.42 and adjusted diluted earnings per share was $0.99; The outbreak of the new crown virus has a significant impact on both net sales and diluted earnings per share; Rapid implementation of cost control measures to promote strong growth in total operating margins in the business unit, interim cost savings of approximately $170 million in the second quarter and structural cost savings of more than $20 million; Strong liquidity; cash and short-term investments of approximately $2.3 billion at the end of the quarter; net debt decreased by about $300 million compared to the previous quarter; and operating cash flow remained basically flat compared to the same period a year earlier, despite the impact of the new coronavirus outbreakPITTSBURGH,, July 17, 2020 - PPG (NYSE: PPG) today reported net sales of about $3 billion for the second quarter of 2020, down about 25 percent from a year earliersales price increased by nearly 2% year-on-yeartotalsales fell about 24% from a year earlierthe decline insales reflects the negative impact of the new crown virus outbreak on business developmentexchange losses adversely affected net sales by more than 3 per cent, or approximately $135 millionacquisition-related business(excluding divestited businesses) contributed nearly 1 percent in sales growthnet income from continuing operations in the second quarter of 2020 was $99 million, or $0.42 per diluted share, and adjusted net income was $235 million, or $0.99 per diluted shareadjusted net income excludes after-tax expenses of $128 million from restructuring adjustments, equivalent to $0.54 per diluted share, and other regular adjustments as described in the results details belowconsolidated net income of $270 million, or $1.13 per diluted share, in the second quarter of 2019, adjusted net income of $441 million, or $1.85 per diluted sharethe pre- and 25 per cent adjusted effective tax rates for the second quarter of 2020, respectivelyadjusted effective tax rate has been higher than expected as a result of the mixed calculation of earnings by country-by-country business areathe pre- and adjusted effective tax rates for the second quarter of 2019 are approximately 24%pre- and adjusted performance details below ", there is no doubt that we achieved good business results in the second quarter, especially in view of the fact that the economic development of most countries and regions around the world has declined significantly due to the outbreak of the new crown virus globally, we are the best performer in our global architectural coatings business, thanks to the rapid growth of national retail (DIY) building coatings demand in major regions "In the current quarter, as China's economy is on track to recover, many of our businesses in China, including automotive original equipment manufacturer (OEM) coatings, general industrial coatings, and industrial and marine coatings, have seen higher sales than in the same period last year," said Michael H McGarry, Chairman and Ceo of " PPG demand for products in most of the world's other major regions was lower than a year earlier, but monthly sales in each region rebounded in the current quarter " At the beginning of the outbreak of the New Crown virus, we took swift and decisive action to mitigate the adverse impact of declining demand for products on the company's earnings during the 2008-2009 financial crisis, the global economy was in severe recession, and we also experienced a similar decline in sales during this extraordinary period, our business unit achieved a total operating margin of nearly 13%, an improvement over the previous period this is also a 'quantitative embodiment' of the structural cost savings we have achieved over the past few years In the second quarter, our previous interim measures reduced the company's associated costs by nearly $170 million, and our business restructuring plan resulted in additional structural cost savings of more than $20 million June, we launched a new restructuring plan with annual structural cost savings of up to $170 million , thanks to strong working capital management, our operating activities generated a cash flow of nearly $500 million in the quarter, roughly reaching the level of the second quarter of 2019 we will continue our tradition of returning shareholders, with a 6% increase in quarterly dividends this initiative is a testament to the high resilience of our business model and the strength of our continued strong cash flow ", "At present, the situation of the epidemic is still serious and complex our core task remains to protect the physical and mental health of our employees, provide full support to customers with high-quality products and excellent service, and help customers to speed up the pace of resumption of production " McGarry added: "Looking ahead, we expect a sustained recovery in the overall global economy However, the recovery rate will vary between the major end-user markets and business areas as the outbreak continues to have varying degrees of impact on different industry areas We expect overall demand for construction coatings to remain in good growth around the world, while sales of the national retail (DIY) business will slow and slow slightly after a small peak in the second quarter automotive original equipment manufacturers (OEM) coatings and general industrial coatings in the U.S and Europe will gradually enter a stable recovery phase, but overall sales levels will remain lower than in 2019 car repair paint and aerospace paint businesses are also expected to face falling sales until tourism and transportation return to near-normal levels we will continue to take discretionary cost management measures, particularly in areas where the recovery timeline is relatively long we have been working to continuously optimize overall liquidity while managing cash flows and balance sheets more carefully """""Finally, I would like to say that our global team is still delivering satisfactory answers at this challenging time , I'm very happy and proud of it we are confident that we will be able to 'reborn' from this crisis and grow into a more powerful company ," McGarry concluded the performance of business units in the second quarter of 2020, the Functional Coatings business achieved net sales of approximately $2.1 billion in the second quarter, a decrease of $360 million, or 15%, from a year earlier net sales fell about 11 per cent from a year earlier on a constant exchange rate basis product price increase contributed nearly 3 percent to net sales, and acquisition-related businesses increased sales by nearly 1 percent to about $20 million, mainly due to acquisitions of Dexmet, Texstars and ICR new crown virus outbreak led to a decline in sales, down about 15 percent, which offset sales growth from the acquisition business, affecting about $360 million finally, exchange losses adversely affected sales by approximately 4 per cent, with an impact of approximately $85 million , aviation coatings sales fell by about 30 per cent due to declining demand from commercial original equipment manufacturers (OEMs) and after-sales, offset to some extent by continued demand for military products net sales of car patch paint rebounded on a monthly basis, but fell about 35 percent overall in the second quarter, largely offsetting the decline in sales due to a sharp decline in global mileage and traffic density excluding exchange rate movements and the impact of acquisitions (organic sales), construction coatings in the Americas and Asia Pacific showed a slight decline in year-on-year net sales, with mixed performance across channels and regions sales of retail (DIY) architectural coatings across the country have risen sharply in all major regions Organic sales in retail and professional channels were mixed, with adverse effects from retail closures in the United States, Canada and Mexico, reduced use of residential interior paint and lower overall commercial paint demand organic sales of architectural coatings in Europe, the Middle East and Africa (EMEA) fell in the , with a low-digit decline in organic sales of architectural coatings in The First Quarter of the second quarter, as the resumption of the economy boosted strong demand across the broader range in June, almost offsetting the impact of the mandatory temporary closure of retail paint stores in the first half of the second quarter Sales in the Industrial Protection and Marine Coatings business fell in the single digits, with sales in all major regions, excluding growth in the Asia-Pacific region, driven by China second-quarter net profit of $362 million, down $65 million, or about 15 percent, from a year earlier, including adverse effects of exchange rate movements, which amounted to $10 million the outbreak resulted in a decline in sales, which adversely affected sales, offset to some extent by cost control measures, higher sales prices and business restructuring plans profit margins in the functional coatings business were flat in the second quarter of last year, despite a 15% drop in sales ,000 industrial coatings business reported net sales of about $950 million in the second quarter, down nearly $650 million from a year earlier and about 40 percent from a year earlier the outbreak of the new crown virus led to a sharp drop in market demand, resulting in a 38% drop in sales sales prices rose slightly in the second quarter adverse impact of exchange losses, affecting net sales of approximately $50 million, a decrease of 3% year-on-year automotive original equipment manufacturers (OEMs) paint sales fell nearly 50 per cent from a year earlier, as global auto production shrank sharply, particularly in the first six weeks of the second quarter, when car production in the US and Europe fell by about 80 per cent Global auto production improved in the current quarter as China's auto production neared the same period last year in the second quarter and in North America and Europe rebounded steadily in June, while coat sales in the industrial sector fell by about 35% in the second quarter due to extremely weak demand in April and May, but also showed a strong monthly recovery in June packaging coatings organic sales rose in a single-digit basis from a year earlier, offset by strong demand in the U.S market, despite weak demand in Asia, such as the closure of some customer factories due to the outbreak second-quarter net profit for the industrial sector coatings business was $34 million, down about $200 million, or 85 percent, from a year earlier, including the impact of exchange losses, which were $7 million net profit from the coatings business in the industrial sector was also affected by lower sales volumes from customers due to the outbreak stoppage, offset to some extent by significant cost control measures, cost savings from restructuring and modest increases in product sales prices net debt of $4 billion for the second quarter of 2020, a decrease of about $475 million from a year earlier include $6.3 billion in total debt, up $800 million from a year earlier, and nearly $2.3 billion in cash and short-term investments, up $1.3 billion from the second quarter of last year , the company's $2.2 billion revolving credit facility has not yet been borrowed In addition, the company announced today that it expects total sales to fall 8% to 15% in the third quarter, depending on the business and region the decline in sales was due to continued uncertainty about the impact of the outbreak on demand in major parts of the world expects total cost savings of $60-70 million in the second half of 2020, including revenue from the restructuring plan approved in the second quarter total operating expenses for the second quarter were approximately $50 million, and the total operating expenses for the third quarter are expected to be $50-55 million Third-quarter net interest expense is expected to be $32-36 million, including a higher debt balance than a year earlier Expects a global effective tax range of 23%-25% in the third quarter of 2020 .