PPG grew Q2 2026 sales 7.2% to $4.5 billion on 4% organic growth, but diluted EPS slipped to $1.96 as price increases covered only about 90% of cost inflation and car-refinish volumes fell; full-year adjusted EPS guidance of $7.70-$8.10 was reaffirmed.
Revenue
$4.5B
+7.2% YoY
Net income
$439M
-2.4% YoY
Diluted EPS
$1.96
-1.0% YoY
Operating margin
13.3%
Sales up 7%, profit flat: price increases ran just behind rising costs
PPG, the Pittsburgh-based paint and coatings maker, grew second-quarter 2026 net sales 7.2% to $4,495 million, but reported diluted earnings per share from continuing operations slipped to $1.96 from $1.98. The two numbers point in different directions for a specific reason: costs rose faster than sales. Cost of sales grew 10.5% ($255 million), which the 10-Q attributes to "higher sales volumes, raw material cost inflation and the unfavorable impact of foreign currency translation." PPG says the conflict in the Middle East that began in the first quarter pushed up the cost of raw materials, energy, logistics and packaging across the coatings industry.
The sales growth breaks down into four roughly equal pieces, per the 10-Q: higher sales volumes (+2%), higher selling prices (+2%), a weaker dollar making foreign sales worth more once converted (+2%), and acquisitions (+1%). Stripping out currency and acquisitions leaves organic sales growth of 4%, meaning growth from the existing business. PPG says this was its sixth quarter in a row of organic growth, with eight of its nine businesses growing.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$4,495M
$4,195M
+7.2%
Organic sales growth (excludes currency and acquisitions)
+4%
n/a
n/a
Gross margin (sales minus cost of sales, before depreciation)
40.2%
Read 0 community reports on PPG Industries, or write your own.Write a report
Operating margin (our calculation: pre-tax income plus net interest, divided by sales)
13.3%
14.7%
-1.4 pts
Income before income taxes
$569M
$598M
-4.8%
Net income from continuing operations (attributable to PPG)
$439M
$450M
-2.4%
Diluted EPS, continuing operations
$1.96
$1.98
-1.0%
Adjusted diluted EPS (company's non-GAAP measure)
$2.23
$2.22
+0.5%
Total segment income (three segments combined)
$743M
$743M
0.0%
Effective tax rate
22.3%
23.4%
-1.1 pts
PPG does not report an "operating income" line, so the operating margin above is our own calculation from the income statement: pre-tax income of $569 million plus interest expense of $71 million minus interest income of $42 million, giving $598 million, or 13.3% of sales (versus $616 million, 14.7%, a year earlier).
Adjusted vs. reported EPS. PPG's adjusted EPS of $2.23 adds back $0.27 per share of items it considers outside normal operations: acquisition-related amortization ($0.09), legacy environmental cleanup at old, non-operating plant sites ($0.08), restructuring costs ($0.04), a legal settlement ($0.04), and deal-related costs ($0.02). The environmental charge ($25 million pre-tax versus $16 million a year ago) and the new legal settlement ($11 million) explain most of why reported earnings fell while adjusted earnings held flat. A lower tax rate (22.3% versus 23.4%) and fewer shares outstanding after buybacks also helped the per-share figure.
Segments: architectural and industrial up, performance coatings down
PPG reports three segments. "Segment income" is each segment's profit before interest, tax and corporate costs.
Segment
Q2 2026 sales
YoY
Segment income
YoY
Segment margin (Q2 2026 vs. Q2 2025)
Global Architectural Coatings
$1,098M
+7.9%
$185M
+15.6%
16.8% vs. 15.7%
Performance Coatings
$1,619M
+7.1%
$329M
-7.6%
20.3% vs. 23.5%
Industrial Coatings
$1,778M
+6.8%
$229M
+0.9%
12.9% vs. 13.6%
Global Architectural Coatings (paint for homes and buildings, mainly in Europe, Latin America and Asia) had the best quarter, but much of its sales growth was currency: of the 7.9% increase, 6 points came from translation, 3 points from price, and volumes fell 1%. Organic sales grew 2%. Profit rose 16% on "higher selling prices, favorable foreign currency translation and the positive impact of cost-control actions." Mexico was the bright spot: strong retail sales and a pickup in project spending. European demand was "mixed by country."
Performance Coatings is where the profit drop came from. Segment income fell $27 million, "driven by lower automotive refinish coatings sales volumes" — paint sold to body shops that repair cars. Refinish organic sales fell by a double-digit percentage. The main reason is a tough comparison: customers bunched their orders into the first half of 2025, and fewer insurance-funded repair claims have come back than PPG expected. Everything else in the segment grew. Aerospace coatings organic sales rose by double digits, with the order backlog "near $300 million," and protective and marine coatings also grew by double digits. Acquisitions added 3% to segment sales. PPG spent $145 million on acquisitions in the first half, and goodwill in this segment rose by $63 million.
Industrial Coatings (paint applied in factories: car bodies, appliances, metal packaging such as drink cans) posted the strongest volume growth, +5%, but selling prices were flat. PPG credits market-share gains in all three of its businesses. Automotive OEM coatings volumes grew by a mid-single-digit percentage even though global car production fell, beating the industry by about 500 basis points (5 percentage points). Packaging coatings organic sales grew by double digits. But raw-material inflation cost more than the volume gains added, so the segment margin fell 0.7 points to 12.9%.
Add the three segments together and profit was exactly flat at $743 million in both years, on $300 million more sales. That is the clearest sign of margin pressure this quarter.
Regions
Region
Q2 2026
Q2 2025
YoY
United States and Canada
$1,519M
$1,495M
+1.6%
EMEA (Europe, Middle East, Africa)
$1,547M
$1,434M
+7.9%
Asia Pacific
$820M
$727M
+12.8%
Latin America
$609M
$539M
+13.0%
US and Canada grew only 1.6%, the slowest of the four regions. Currency accounts for some of the growth outside North America, but the 10-Q does not break that out by region.
Pricing vs. inflation
The 10-Q says the 2% price increase in the quarter "offset approximately 90% of the cost of goods sold inflation." Management expects price increases and productivity savings to cover 100% of cost inflation by the fourth quarter, which the CEO called one quarter ahead of the original plan. Until then, some margin pressure is built in, as the drop in gross margin from 42.0% to 40.2% shows. Tariffs had no significant effect in the first half, according to the filing.
First half 2026 and cash
For the six months, net sales rose 6.9% to $8,425 million, but 4 points of that was currency. Diluted EPS from continuing operations rose 1.4% to $3.66, and adjusted EPS rose 3.3% to $4.06. Cash from operating activities rose to $592 million from $369 million, "primarily due to improved working capital performance," meaning less cash tied up in unpaid customer bills and inventory. PPG spent $309 million on capital projects, $175 million on share buybacks (down from $540 million a year earlier), and $317 million on dividends. It repaid a $700 million bond in March from cash on hand and issued CHF 320 million of Swiss-franc bonds in June. Cash and short-term investments fell to $1.6 billion from $2.2 billion at year-end, and the earnings release puts net debt at $5.3 billion, $415 million lower than a year earlier.
Takeaway: PPG's growth is real, with a 4% organic increase led by aerospace, packaging and Latin American paint, but this quarter it did not reach profits. Combined segment profit was flat at $743 million on $300 million more sales, because price increases covered only about 90% of the cost inflation linked to the Middle East conflict, and because the high-margin car-refinish business shrank. Whether earnings grow in the second half depends on two things: prices fully covering costs by Q4, as management promises, and refinish sales recovering.
Outlook
Management reaffirmed full-year 2026 adjusted EPS guidance of $7.70 to $8.10. For the third quarter, PPG expects:
Company organic sales growth in the low- to mid-single-digit percentage range.
Company adjusted EBITDA margin between flat and 1 point lower than a year ago (EBITDA is earnings before interest, taxes, depreciation and amortization).
Organic sales growth for Performance Coatings in the mid- to high-single digits, with refinish sales expected to grow by a low- to mid-single-digit percentage in the second half as the unusual 2025 order timing unwinds.
Organic sales for Architectural and Industrial Coatings between flat and low-single-digit growth. Industrial margins should shrink in the second half because some contract prices follow raw-material indexes with a lag.
First-half adjusted EPS was $4.06, so reaching the $7.70-$8.10 range requires $3.64-$4.04 in the second half. The low end allows for a second half weaker than the first. The high end needs pricing to catch up with inflation on schedule and refinish volumes to recover. Guidance for flat-to-lower margins in Q3 suggests that catch-up is not finished yet, so Q4 carries more of the weight. In our view, the numbers to watch in the Q3 report are the price-versus-inflation gap and the Performance Coatings margin, which fell 3.2 points this quarter.