PPG Industries (NYSE:PPG) executives said the company delivered “solid” performance in 2025 despite what CEO Tim Knavish described as a “very mixed and dynamic macroeconomic environment,” with fourth-quarter results marking the firm’s strongest organic growth of the year.
On the company’s fourth-quarter and full-year 2025 earnings call, Knavish said PPG generated consistent organic growth through a combination of higher selling prices and volume gains, while continuing “self-help” cost actions and strong cash flow generation. CFO Vince Morales also addressed quarterly expense items, interest costs, and raw material expectations, while management outlined guidance themes for 2026, including a softer first half and a stronger second half in several areas.
Full-year 2025 results: sales, margins, and cash flow
PPG’s segment EBITDA margin for the year was 19%. Knavish said PPG’s 2% organic sales growth outpaced an estimated market decline of -0.2%, attributing the performance to productivity solutions for customers and share gains in core technologies.
Fourth-quarter performance and segment highlights
For the fourth quarter, PPG reported net sales of $3.9 billion, up 5% year over year, including 3% organic growth supported by volume growth across all regions. Knavish said Asia Pacific led regional volume growth at a mid-single-digit percentage, with low-single-digit growth in the U.S., Latin America, and Europe. Segment EBITDA margin was 18% in the quarter, and adjusted EPS was $1.51. Knavish said improved organic growth and operational performance were more than offset by higher interest costs and increased corporate expenses.
Management pointed to several end-market and segment developments:
- Aerospace coatings delivered record sales and earnings in the quarter, driven by demand for “technology-advanced” products.
- Automotive OEM net sales increased 6%, with Knavish citing share gains and customer mix.
- Architectural Coatings in Latin America posted high single-digit organic growth as project-related sales recovered sequentially and retail remained strong.
In Global Architectural Coatings, fourth-quarter net sales rose 8% to $951 million, including 2% organic growth. Knavish said Mexico delivered strong retail performance and sequential improvement in project-related spending. He said project-related spending was weak in the first half of 2025 due to tariff-related uncertainty but recovered in the second half, a trend PPG expects to extend into 2026 based on leading indicators and customer discussions. In Europe, demand was “mixed,” with a low-single-digit decline partially offset by pricing; management said the business has delivered positive pricing for 39 consecutive quarters. Segment income increased 16% and EBITDA margins improved nearly 100 basis points, with management expecting positive organic sales and margin momentum into the first quarter of 2026.
In Performance Coatings, fourth-quarter net sales grew 5% to $1.3 billion, led by double-digit organic growth in Aerospace and continued gains in Protective and Marine Coatings, which Knavish said has delivered 11 consecutive quarters of volume growth. Automotive Refinish organic sales declined a high-single-digit percentage due to distributor order patterns that weighted purchases to the first half of 2025. Knavish said U.S. accident claims—a key industry metric—were down only 2% year over year in December, compared with high-single-digit or low-double-digit declines earlier in the year. Segment EBITDA margin declined due to lower Refinish sales and higher growth-related investment spending in Aerospace and Protective and Marine, partly offset by higher selling prices.
In Industrial Coatings, fourth-quarter net sales grew 3% to $1.6 billion, with organic results supported by share gains that drove 5% sales volume growth. Automotive OEM net sales rose 6%, and Packaging Coatings organic sales increased by a double-digit percentage year over year, which management attributed to share gains in Europe and the U.S. tied to a technology shift toward PPG’s sustainable portfolio. Segment EBITDA rose 6%, and EBITDA margin improved 30 basis points to 15.1%.
2026 outlook: mixed demand, price positivity, and a back-half ramp
Knavish said PPG expects demand in Europe and global industrial end-use markets to remain challenged in 2026, while growth is expected to be driven by Aerospace, Architectural Coatings in Mexico, and approximately $100 million of share gains expected to be realized in Industrial Coatings (including $50 million of carryover share gains discussed previously).
Management said overall company pricing is expected to be positive, with strength in Performance and Architectural Coatings, partially offset by modest contraction in Industrial Coatings. The company guided to organic sales growth “in the range of flat to positive low single-digit percentage.”
On raw materials, Knavish said the raw material basket remains favorable for coatings producers and that supplier base consolidation is expected to help offset enacted tariffs, resulting in expected flat raw material costs for the year. In Q&A, management cited categories that were up in its outlook, including epoxies (tariff-related), specialty pigments (tariff-related), and metal packaging (aluminum and steel tariffs), while noting TiO2 remained “pretty soft.”
On earnings cadence, Knavish said operational excellence programs are expected to reduce costs by another $50 million in 2026. He also said EPS growth at the midpoint of guidance represents a mid-single-digit percentage increase, with EPS expected to be flat to low-single-digit growth in the first half and increasing to high-single-digit growth in the second half. In response to a question about quarterly cadence, he characterized the ramp as “flat-ish for Q1” and “low single digits-ish for Q2,” followed by stronger results in the back half.
Key themes from Q&A: Refinish destocking, Aerospace capacity, and AI-driven formulation
Auto Refinish destocking was a recurring topic, with Knavish calling it the biggest driver behind limited operating leverage despite organic growth. He said the company expects a difficult comparison in the first half of 2026, followed by incremental volume growth and normalized distributor buying patterns in the second half. Knavish said PPG began seeing “fill-in orders” from distributors in December and described “green shoots” such as normalization in insurance premiums and continued share wins tied to productivity offerings.
Aerospace growth and capacity constraints also drew attention. Knavish said Aerospace sales growth was double-digit in 2025 (and also double-digit in 2024) and that PPG is guiding “high single digits” for Aerospace in 2026 as it laps strong comparisons. He said the business is capacity constrained and referenced approximately $120 million of incremental Aerospace-related capex approved last year for debottlenecking and expansions. He also referenced a previously announced $380 million new factory that will take about two years to bring online for sealants and coatings.
On AI and digital initiatives, Knavish said formulation AI is internally developed (with some partners) and viewed as a differentiator. He said PPG commercialized a Refinish clear coat fully developed using AI and has also used AI to optimize 50 existing products already, citing both performance and cost benefits. Morales added that PPG’s prior work digitizing formulation data enabled these initiatives. When asked about payback, Knavish said it is early but that the company is already “booking savings to the bottom line” from the initial launches.
Finally, on capital allocation, Knavish said PPG remains “organic first” but will continue to evaluate bolt-on or potentially transformational acquisitions, emphasizing asset fit, timing, and price—while noting the company continues to weigh repurchases versus other uses of cash.
About PPG Industries (NYSE:PPG)
PPG Industries is a global supplier of paints, coatings and specialty materials that serves industrial, transportation, consumer and construction markets. Founded in 1883 as the Pittsburgh Plate Glass Company, PPG has evolved from its origins in glass manufacturing into a diversified coatings and materials company headquartered in Pittsburgh, Pennsylvania. The company develops and manufactures a broad array of products used to protect and enhance surfaces, from consumer paints to highly engineered coatings for demanding industrial applications.
PPG’s product portfolio includes architectural and decorative paints, automotive original equipment and refinish coatings, industrial coatings for machinery and equipment, protective and marine coatings, aerospace and defense coatings, and packaging coatings and materials.
