So here's a classic corporate move: when costs go up, you tell your customers the price is going up too. PPG Industries Inc (PPG) did just that after the market closed Wednesday, announcing it's raising prices across all its product lines—by up to 20%—globally. The reason? "Continued global volatility and supply constraints," which is corporate-speak for "everything is more expensive and harder to get, so you're going to pay for it."
"This pricing action allows us to ensure availability of supply as we navigate unexpected and increased cost pressures," said Tim Knavish, chairman and CEO of PPG. In other words, if you want the paint, you'll pay the premium. It's a straightforward, if not particularly customer-friendly, bit of economics.
Alongside the price hike news, PPG also dropped some preliminary first-quarter numbers. The company expects adjusted earnings to come in at $1.83 per share. That's above the $1.71 per share that analysts were expecting, according to market data. So, not only are they charging more, but they're also performing better than expected. Knavish credited "strong performance in our differentiated architectural coatings Latin America and aerospace businesses" and "the execution of our self-help actions" for driving margins above original expectations.
Looking ahead, PPG said it expects second-quarter organic sales and adjusted earnings growth to be in the "flat to low single-digit percentage range." That's a bit of a cautious outlook, but given the price increases just announced, it suggests volume might take a hit or costs are still running hot.
The market seemed to like the combination of higher prices and a beat on earnings. PPG shares were up 3.97% in after-hours trading Wednesday, changing hands at $112. The full first-quarter financial results are scheduled for April 28, after the market close. Until then, investors have a preliminary win and a clear signal: when PPG talks about navigating cost pressures, it means passing them right along.
