Another strong performance for PPG in 2005, says CEO PITTSBURGH, April 21, 2005
– PPG Industries should deliver another strong performance in 2005, said Charles E. Bunch, president and chief executive officer, at the company’s annual meeting here today.
“As 2004 illustrated, the strength and, just as important, the balance of our businesses enables us to generate strong earnings and cash flow in nearly all stages of the economic cycle,” said Bunch, who will become chairman and CEO July 1, as announced last month.
PPG generated record sales of $9.5 billion in 2004, with net income up 38 percent to $683 million and cash from operations exceeding $1 billion.
Bunch said he sees continued strength in the company’s chlor-alkali business in 2005. “In addition, our optical products business is positioned to enjoy continued growth with the introduction of our fifth-generation Transitions photochromic lenses. We believe there are good opportunities in glass and fiber glass. Demand remains strong in flat glass. Meanwhile, operating rates in fiber glass have grown.”
PPG’s coatings businesses are expected to remain strong, though Bunch said, “We don’t see the rise in raw materials costs – which began at midyear last year – abating in the short term.”
Bunch said the company will continue to follow its five prescribed uses of cash. In order, they are: paying dividends, prudent funding of existing businesses, managing the debt portfolio, pursuing logical acquisitions and repurchasing stock.
Earlier in the day PPG’s board of directors raised the quarterly dividend on the company’s common stock to 47 cents from 45 cents a share, payable June 10 to shareholders of record May 10. With the increase announced today, PPG has raised shareholder payments every year since 1972. PPG has paid dividends without interruption since 1899.
“Our ability to generate cash also provides us the flexibility to invest in acquisitions throughout the economic cycle,” Bunch said. “With more opportunities beginning to surface, we will likely be more active on the acquisition front, continuing to invest in our coatings and optical products businesses.”
Bunch added that PPG doesn’t expect to make another $2 billion in acquisitions as the company did in the latter half of the 1990s. “Instead, we anticipate making small, bolt-on acquisitions,” Bunch said.
Bunch also said the company remains committed to its plan to repurchase up to $500 million of its shares this year, buying back more than $100 million in the first quarter. PPG’s plan to repurchase $500 million in stock in 2005, combined with the $100 million of stock the company repurchased in 2004, represents about 5 percent of the company’s outstanding shares.
Chairman Raymond W. LeBoeuf, who announced last month that he will retire July 1 after 25 years with the company, the last eight as chairman and CEO, conducted the meeting and reflected on the company’s efforts to build a better mix of businesses during his tenure. “As a result of more than 20 acquisitions and several divestitures, we generated more than 70 percent of our operating income last year from coatings and optical products – our growth businesses,” LeBeouf said.
Also Allen J. Krowe, retired director and vice chairman of Texaco Inc., retired from PPG’s board of directors after 18 years of service.
PPG shareholders elected three incumbent directors: Michele J. Hooper, former president and chief executive officer of Voyager Expanded Learning, Inc.; Robert Mehrabian, chairman, president and chief executive officer of Teledyne Technologies Inc.; and LeBoeuf.
Shareholders also endorsed the appointment of Deloitte & Touche LLP as the company’s independent registered public accounting firm for 2005.
T ransitions is a trademark of PPG Industries.