“We have all witnessed the devastation caused by the recent hurricanes that originated in the Atlantic Ocean and the earthquakes that occurred in Mexico,” said Michael McGarry, PPG chairman and CEO. “We have been closely monitoring the impacts on our employees in Texas, Florida and adjacent states, Mexico, Puerto Rico and other parts of the Caribbean.
"We will continue to support our employees and the impacted communities during the recovery and rebuilding efforts, including making contributions to the American Red Cross from the PPG Foundation," McGarry continued. "We are also matching PPG employee contributions and working directly with those employees who have experienced significant personal property damage or loss.
“PPG has a strong presence in all impacted areas, including more than 100 architectural coatings company-owned stores, approximately 1,600 concessionaire stores in Mexico, various distribution centers, manufacturing facilities and administrative offices. Some of our properties have sustained damage, and there will be a certain amount of inventory that will not be recoverable. Our teams are working to assess the full range of the damage, and we are working diligently to resume normal operations. More impactful to PPG has been the disruption of our supply chain, as certain key raw materials have been placed on force majeure or allocation and supply routes have been interrupted.
“As a result, we anticipate that transitory impacts from these events will affect our third quarter diluted earnings-per-share by $0.05 to $0.10," McGarry said. "This includes increased transportation and logistics costs necessary to move raw materials and inventory to avoid PPG customer disruptions; overall higher costs of raw materials in short supply; facility and inventory damage net of any insurance recoveries; and the impact from lower sales in the affected areas. We are still in the process of finalizing the financial impact and will provide more information during our third quarter earnings conference call. We currently expect that net impacts from these events to our fourth quarter financial results will be negligible or very modest."
McGarry commenting more broadly on business trends for the third quarter said: “Excluding the unfavorable impacts from the hurricanes and the earthquakes, our third quarter volume growth rate is expected to be above 1.5 percent, exceeding our growth rate for the first half 2017.
"We had previously anticipated some moderation in raw material cost inflation in the third quarter," he continued. "However, high levels of inflation have persisted driven by the ongoing impacts from supplier outages in Europe and continued mandatory curtailments of raw material production in China. Accordingly, we expect our third quarter inflation rate will now match or possibly exceed the prior sequential quarter, exclusive of the hurricane impacts. We have secured modest, sequential selling price increases for the third and fourth quarters in a number of our businesses, including automotive refinish; automotive original equipment manufacturer (OEM) coatings; architectural coatings in U.S., Canada, Mexico and certain European countries; and protective and marine coatings. We continue to work with customers across all of our businesses and regions on additional pricing to offset the higher raw material costs."
The company also on Monday announced that including the effects from the hurricanes and recent business trends, third quarter diluted earnings-per-share from continuing operations are expected to be in the range of $1.48 to $1.55.
PPG’s teleconference to discuss detailed third quarter 2017 financial results is scheduled for Thursday, Oct. 19, 2017.