S&P Global Ratings revised its outlook on paints and coatings maker PPG Industries Inc. to negative from stable, citing the possibility of a ratings downgrade in the next two years if the company's EBITDA margins remain weak.
The company's Ratings-adjusted EBITDA margins started weakening in early 2018 and remain below historic levels due to higher oil prices and raw material costs, as well as production constraints in China. The agency still expects PPG to restore its EBITDA margins and profitability to levels seen in 2017.
S&P Global Ratings also flagged concerns over a macroeconomic slowdown, which could weigh on demand from PPG's key customers and eventually lead to lower or negative revenue growth.
The rating agency said an upgrade over the next two years is unlikely, noting that PPG's previous acquisition bids for Akzo Nobel NV represented a significant shift in its financial policies.
S&P Global Ratings affirmed PPG's long- and short-term issuer credit ratings at A-/A-2 and senior unsecured ratings at A-. The company's adjusted debt-to-EBITDA ratio is forecast to remain at or come in slightly below 2x over the next two years.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.