PPG Annual Report and 10K 2019

20 2019 PPG ANNUAL REPORT AND 10-K Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2019 and 2018. A discussion of changes in our results of operations for the year ended December 31, 2018 as compared to the year ended December 31, 2017 has been omitted from this Form 10-K, but may be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2018 Form 10-K, filed with the Securities and Exchange Commission on February 21, 2019. Performance Overview Net Sales by Region % Change ($ in millions, except percentages) 2019 2018 2019 vs. 2018 United States and Canada $6,475 $6,485 (0.2)% Europe, Middle East and Africa (EMEA) 4,549 4,678 (2.8)% Asia Pacific 2,542 2,618 (2.9)% Latin America 1,580 1,593 (0.8)% Total $15,146 $15,374 (1.5)% Net sales decreased $228 million due to the following: Lower sales volumes (-3%) Unfavorable foreign currency translation (-2%) Partially offset by: Higher selling prices (+2%) Acquisition-related sales (+2%) We achieved higher selling prices across nearly all businesses, reflecting the value of our products and services. These increases helped to offset general cost inflation, including employee wages and benefits. U.S. and Canada net sales were relatively flat compared to the prior year. Higher selling prices and net sales from acquired businesses were almost entirely offset by lower sales volumes. The unfavorable impact from customer assortment changes in the U.S. architectural DIY channel negatively impacted sales volumes. Europe, Middle East and Africa (EMEA) net sales decreased nearly 3% versus the prior year, driven by unfavorable foreign currency translation and lower sales volumes, partially offset by higher selling prices in all businesses and net sales from acquired businesses. Asia Pacific net sales decreased nearly 3% versus the prior year, driven by unfavorable foreign currency translation and lower sales volumes, partially offset by net sales from acquired businesses and higher selling prices. Latin America net sales decreased slightly versus the prior year, driven by lower sales volumes and unfavorable foreign currency translation, partially offset by higher selling prices. For specific business results see the Segment Results section within Item 7 of this Form 10-K. Cost of sales, exclusive of depreciation and amortization % Change ($ in millions, except percentages) 2019 2018 2019 vs. 2018 Cost of sales, exclusive of depreciation and amortization $8,653 $9,001 (3.9)% Cost of sales as a % of net sales 57.1% 58.5% (1.4)% Cost of sales, exclusive of depreciation and amortization, decreased $348 million due to the following: Lower sales volumes Foreign currency translation Restructuring cost savings Partially offset by: Cost of sales attributable to acquired businesses General cost inflation

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