PPG chairman discusses strategy, strong cash position at annual meeting
PITTSBURGH, April 16, 2009 –
PPG Industries’ (NYSE: PPG) Chairman and Chief Executive Officer Charles E. Bunch reviewed steps the company took in 2008 and early 2009 to further the company’s transformation to a more focused coatings and specialty products company and weather difficult economic conditions at its annual meeting of shareholders today.
“The strategic vision we have established is to continue to be the world’s leading coatings and specialty products company,” said Bunch. “We have continued to make progress toward achieving that vision.”
Bunch said that as a result of the company’s acquisition of SigmaKalon Group in January 2008, its divestiture of a majority interest in its automotive glass and services business in September 2008, and other strategic actions, the company has “a better business mix and a stronger global presence.”
“About 80 percent of our current portfolio consists of coatings, optical products and specialty materials, versus three years ago when these businesses accounted for about 64 percent of sales,” he said. “What’s more, now, less than 50 percent of our sales are in the United States and Canada, versus three years ago when it was about 70 percent. This diversification will help PPG grow in the emerging regions of the world and reduces the impact to PPG from economic developments in any one region.”
In 2008, PPG’s overall sales were a record $15.8 billion, up 30 percent over the previous year. The company’s Performance Coatings, Industrial Coatings, Optical and Specialty Materials and Commodity Chemicals reporting segments all experienced double-digit sales increases for the year. Glass segment sales decreased due to the auto glass divestiture and lower volumes in the fiber glass and performance glazings businesses. Overall, PPG’s reported earnings for 2008 were $3.25 per share. Bunch said that while earnings were not as high as the previous year, the figure included one-time costs related to the SigmaKalon acquisition and costs related to restructuring.
In September 2008, PPG announced a restructuring plan to result in approximately $100 million in pretax annual cost savings by the end of 2009, and, as part of the initiative, several PPG manufacturing facilities in the United States, Canada and Europe will be closed or idled, and employment reduced by approximately 1,300 positions. Last month, PPG announced another business restructuring plan focused on generating additional annual savings of about $60 million in 2009 and approximately $140 million at an annual rate thereafter. This sweeping initiative includes the closure of several manufacturing and distribution facilities and a broad reduction in employment of approximately 2,500 across the company globally.
Bunch told shareholders that one bright spot for PPG in 2008 and continuing in 2009 is its cash generation and cash on hand. “In 2008, PPG generated about $1.4 billion of cash, up nearly 40 percent from the prior year. And, at the end of the first quarter 2009, we had about $530 million of cash on hand,” he said. “This gives us tremendous financial flexibility, which is critical in today’s business climate.”
“We expect the challenging business environment to continue into 2009,” Bunch said. “While we anticipate seasonal improvement versus the first quarter, we expect our second quarter activity levels to remain low in comparison to prior years. While we are beginning to see occasional upticks in activity, they have not been sustained over a long enough period of time to give us comfort that any region or end-use market has ‘turned the corner.’”
“PPG is continuing to adapt to an extremely difficult and volatile global economy,” he concluded. “We are also staying the course and implementing key strategies to transform our company. Our performance this past year under intensely difficult market conditions continues to validate the strength of our portfolio and the success of our strategic direction.”
PPG shareholders elected four incumbent directors: Charles E. Bunch, chairman and chief executive officer, PPG; Robert Ripp, chairman, Lightpath Technologies; Thomas J. Usher, chairman of the board, Marathon Oil Corporation; and David R. Whitwam, retired chairman and chief executive officer, Whirlpool Corporation. Also, shareholders endorsed the appointment of Deloitte & Touche LLP as the company’s independent registered public accounting firm for 2009.About PPG
Pittsburgh-based PPG is a global supplier of paints, coatings, optical products, specialty materials, chemicals, glass and fiber glass. The company has more than 140 manufacturing facilities and equity affiliates and operates in more than 60 countries. Sales in 2008 were $15.8 billion. PPG shares are traded on the New York Stock Exchange (symbol: PPG). For more information, visit www.ppg.com
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 or objectives and financial or operational performance or results. These matters involve risks and uncertainties as discussed in PPG Industries' periodic reports on Form 10-K and Form 10-Q, and its current reports on Form 8-K, 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 global economic conditions, increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials and energy, the ability to maintain favorable supplier relationships and arrangements, difficulties in integrating acquired businesses and achieving expected synergies there from, economic and political conditions in international markets, foreign exchange rates and fluctuations in such rates, the impact of environmental regulations, unexpected business disruptions and the unpredictability of possible future litigation, including litigation that could result if the asbestos settlement discussed in PPG's filings with the SEC does not become effective. However, 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 PPG's consolidated financial condition, operations or liquidity.
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