Profitable growth is PPGs primary mission, chairman says NEW YORK, Nov. 8, 2005
– PPG Industries’ Chairman and Chief Executive Officer Charles E. Bunch told analysts and investors today that the nearly $1 billion in cash from operations the company has generated on an annual basis is “being put to work, helping us to generate profitable growth, which is our company’s primary mission.”
Last month PPG reported record third-quarter sales, marking the 10th consecutive quarter of year-over-year sales records. Bunch said aerospace products, architectural coatings, optical products and Asia coatings are generating strong sales growth, with volume increases in these businesses contributing nearly $600 million in sales, or about 6 percent, since 2003.
Just as important, the four businesses are key drivers of earnings growth, Bunch said at a meeting conducted here by the company.
PPG’s aerospace business has logged double-digit volume gains the past six quarters. Architectural coatings has doubled the size of its company-owned store network since 1999 to more than 330 stores, adding 50 stores in the past 12 months.
Meanwhile, optical products has grown sales at a compound rate of 17 percent per year since 2002. And PPG’s coatings sales in Asia now account for nearly 10 percent of the company’s total coatings sales, with margins comparable to those for PPG’s entire coatings segment.
PPG generated about $5 billion in cash from operations from 2000 to 2004, spending approximately $1.5 billion during that period to retire debt. As a result, PPG’s debt-to-total-capital ratio is approximately 27 percent.
“We have only a few minor debt payments due over the next 10 years,” said William Hernandez, PPG senior vice president, finance. “Therefore, we have considerable financial flexibility for the next decade to use our cash to create shareholder value.”
Bunch praised the company’s Lake Charles, La., workers for their efforts in restoring PPG’s largest chemicals facility, which was struck by Hurricane Rita in late September.
Yesterday the company announced the Lake Charles complex is now operating at 80 percent of capacity, with a current estimate of restoring the remaining 20 percent in the next few weeks.
Bunch repeated that the company expects hurricanes Katrina and Rita to have at least the same earnings impact on fourth-quarter results as they did in the third quarter, excluding higher natural gas prices. Last month the company reported the hurricanes had a negative impact of approximately $30 million pretax on earnings for the July-through-September period.
“Now following the hurricanes, we are being challenged once again by another round of input cost increases, primarily in the natural gas arena,” Bunch said. “And we are working diligently, once again, to preserve our margins.”
Bunch said he believes the company is up to the challenge. “We are proud that we have continued concurrently to generate excellent earnings and also grow the top line,” Bunch said. “Furthermore, we expect continued sales and cash-generation growth going forward, with aerospace, architectural coatings, optical products and Asian coatings leading the way.”
Pittsburgh-based PPG Industries is a global supplier of coatings, glass, fiber glass and chemicals, with 108 manufacturing facilities and equity affiliates in more than 20 countries. Sales in 2004 were US$9.5 billion.
--22764-- Forward-Looking Statement
Statements in this news release relating to matters that are not historical facts are forward-looking statements reflecting the company’s current view with respect to future events and financial performance. These matters involve risks and uncertainties that could affect the company’s operations, as discussed in PPG Industries’ periodic reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Accordingly, many factors could cause actual results to differ materially from the company’s forward-looking statements.
Among these factors are increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, which also depends on economic and political conditions, foreign exchange rates and fluctuations in those rates, and the unpredictability of possible future litigation, including litigation that could result if the asbestos settlement discussed in PPG’s reports filed with the Securities and Exchange Commission does not become effective. Further, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.
Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the company’s consolidated financial condition, operations or liquidity.