PPG Industries, Inc. manufactures and distributes coatings, specialty materials, and glass products. It operates in three segments: Performance Coatings, Industrial Coatings, and Glass. The Performance Coatings segment provides coatings products for automotive and commercial transport/fleet repair and refurbishing; light industrial and specialty coatings for signs; coatings, sealants, and transparencies for commercial, military, regional jet and general aviation aircraft, and transparent armor for specialty applications; protective and marine coatings and finishes; architectural coatings; and purchased sundries to painting contractors and consumers, as well as chemical management services. As of December 31, 2016, this segment operated company-owned stores approximately 920 stores in North America, 40 in Australia, and 75 in Central America. In addition, it sells coatings and related products through approximately 4,200 stores that are independently owned and operated by 700 concessionaires primarily in Mexico. The Industrial Coatings segment provides adhesives and sealants for the automotive industry; metal pretreatments and related chemicals for industrial and automotive applications; packaging coatings for the protection, performance, and decoration of metal cans, closures, plastic tubes, industrial packaging, and promotional and specialty packaging; precipitated silicas for tire, battery separator, and other markets; substrates used in radio frequency identification tags and labels, e-passports, drivers' licenses, and identification cards; organic light emitting diode materials for use in displays and lighting; optical lens materials and photochromic dyes for optical lenses and color-change products. The Glass segment produces fiber glass for use in commercial and residential construction, wind energy, energy infrastructure, transportation, and electronics industries. The company was founded in 1883 and is headquartered in Pittsburgh, Pennsylvania.
Business Analysis of PPG Industries
The Basic Materials Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how PPG Industries compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by PPG Industries to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of PPG Industries with an interactive chart.
- Revenue Growth: PPG Industries reported a revenue growth of -0.1% year-on-year during 2016. Chemicals Industry grew at -4.1% in the same period
- COGS share of Revenues: As a percentage of revenue, PPG Industries spent 54.7% of its total revenues on COGS. Chemicals industry average (COGS share of revenue) in the same period was 70.2%
- R&D share of Revenues: As a percentage of revenue, PPG Industries spent 3.2% of its total revenues on R&D. Chemicals industry average R&D spending in the same period was 2.5%
- SG&A share of Revenues: As a percentage of revenue, PPG Industries spent 24.8% of its total revenues on Sales, Marketing, and General Administration (SG&A). Chemicals industry average SG&A spending in the same period was 13.0%
- Inventory share of Revenues: As a percentage of revenue, PPG Industries spent 10.5% of its total revenues on Inventories. Chemicals industry average Inventory spending in the same period was 14.6%
- Accounts Payable share of Revenues: As a percentage of revenue, PPG Industries invested 23.8% of its total revenues on Accounts Payable (A/P) Chemicals industry average Accounts Payable investment in the same period was 12.6%
- Accounts Receivable share of Revenues: As a percentage of revenue, PPG Industries invested 18.2% of its total revenues on Accounts Receivable (A/R). Chemicals industry average Accounts Receivable investment in the same period was 16.8%
- PP&E share of Revenues: As a percentage of revenue, PPG Industries invested 18.7% of its total revenues on Property, Plants, and Equipments (PP&E). Chemicals industry average PPE investment in the same period was 52.9%
- Intangibles share of Revenues: As a percentage of revenue, PPG Industries invested 37.7% of its total revenues on Intangibles. Chemicals industry average Intangibles investment in the same period was 31.4%
- Net Margins: PPG Industries Net Margins in the year 2016 were 5.9%. Chemicals industry average Net Margins in the same period were 8.1%
Sector and Industry Association of PPG Industries
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
PPG Industries is associated with Basic Materials Sector and Chemicals Industry.
Basic Materials sector is comprised of the following industries: Metal Mining; Coal Mining; Chemicals. The definitions for each of the industries is as follows:
- Metal Mining industry includes companies primarily engaged in mining, developing mines, or exploring for precious metals such as Gold, Silver, Platinum and base metals such as Iron, Copper, Aluminum, Lead, and Zinc. It also includes companies that manufacture alloys such as steel.
- Coal Mining industry includes companies engaged in the exploration for and/or mining of coal.
- Chemicals industry includes companies that produce and/or distribute commodity and specialty chemicals. The companies manufacture three general classes of products: (1) basic chemicals, such as acids, alkalies, salts, and organic chemicals; (2) chemical products to be used in further manufacture, such as synthetic fibers, plastics materials, dry colors, and pigments; and (3) finished chemical products to be used as materials or supplies in other industries, such as paints, fertilizers, and explosives.
Industry Ranking of PPG Industries
With $14.8 billion revenues, PPG Industries ranked number 4 of all the companies in the US Chemicals industry. There were a total of 66 public companies in the US Chemicals industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Chemicals industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.
- Conduct a holistic benchmarking; to identify and target additional sources of value
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