PPG Industries, a leading paint and coatings company, has released its fourth quarter financial report. While the company’s revenue saw a modest increase, there was a significant decline in profit attributed to a goodwill impairment and rising corporate expenses.
Profit Decline and Adjusted Earnings
In the fourth quarter, PPG Industries reported a profit of $90 million, equivalent to 38 cents per share. This represents a decrease from the $238 million, or $1.01 per share, recorded in the same quarter last year. However, after adjusting for one-time items, the company’s earnings per share were $1.53, surpassing the expectations of analysts surveyed by FactSet, who were anticipating $1.49 per share.
Revenue Growth
Despite challenges faced by the company, including higher costs of capital and a decline in long-term forecast for its traffic solutions reporting unit, PPG Industries achieved a 4% increase in revenue. The company generated $4.35 billion in revenue during the fourth quarter, exceeding analyst forecasts of $4.27 billion.
Goodwill Impairment and Rising Corporate Expenses
During the quarter, PPG Industries recorded a non-cash goodwill impairment of $160 million for its traffic solutions reporting unit. This impairment was primarily due to higher costs of capital and challenges faced by the unit’s Argentinian operations. Additionally, the company experienced changes in its global footprint, which impacted the unit’s long-term forecast.
Furthermore, corporate expenses nearly doubled in the fourth quarter due to higher performance and shareholder return-based incentive compensation.
Future Projections
PPG Industries has provided adjusted earnings guidance for the first quarter and full year 2024. The company expects adjusted earnings per share of $1.80 to $1.87 for the first quarter, falling short of analyst projections of $1.98 per share. However, for the full year 2024, PPG Industries anticipates adjusted earnings per share of $8.34 to $8.59, aligning with the current consensus estimate.
