Shares of U.S. coatings firm PPG Industries Inc. plunged after it provided an updated forecast for its third-quarter earnings, which it said were hurt by rising costs and weakening demand.

PPG Chairman and CEO Michael McGarry said on Oct. 8 that the company faced the highest level of cost inflation in two years during the quarter.

"In the third quarter, we continued to experience significant raw material and elevating logistics cost inflation, including the effects from higher epoxy resin and increasing oil prices," McGarry said.

Overall demand in China also softened in the third quarter, McGarry added, and automotive refinish sales weakened as several U.S. and European customers were carrying high inventory levels due to decreased end-use market demand.

"This lower demand, coupled with the currency effects, was impactful to our year-over-year earnings and is expected to continue for the balance of the year," he said.

PPG expects to earn between $1.47 per share and $1.51 per share from continuing operations in the third quarter. Adjusted EPS from continuing operations are projected to be in the range of $1.41 to $1.45, down from $1.52 a year ago.

Third-quarter net sales are expected to be unchanged year over year at $3.8 billion.

"We are disappointed with the third-quarter earnings results … We will continue to aggressively manage our costs including accelerating restructuring activities wherever possible," McGarry said.

PPG expects the increase in raw material costs to continue in the fourth quarter, but at a more modest pace compared to the same period a year earlier, according to McGarry.

The company projected fourth-quarter EPS of $1.03 to $1.13.

PPG's stock was down 10.04% to $98.58 per share at 12:39 p.m. ET. The coatings firm will announce its third-quarter earnings on Oct. 18.