PPG sales, earnings per share reach record highs in 2Q
By John D. Oravecz
Published: Thursday, July 18, 2013, 9:00 a.m.
Acquisitions are paying off for PPG Industries Inc.
The Pittsburgh company, which has focused on buying coatings businesses worldwide, on Thursday said sales and earnings per share in the second quarter reached record levels for any three-month period in the company's history.
Net income for the period was slightly lower than a year ago.
The biggest boost came from the $1.05 billion acquisition of AkzoNobel N.V.'s North American architectural coatings business, which was completed on April 1 and was the second-largest in PPG's history. It added $475 million in sales, as acquisitions as a whole boosted revenue by 15.2 percent, PPG said. With brand names such as Glidden paints and Liquid Nails, it is the main supplier of paints to Wal-Mart.
To capture additional benefits from that deal by reducing costs, PPG's board approved a $102 million restructuring program to integrate the AkzoNobel business with PPG's legacy architectural business. The expense is expected to include severance and other costs of combining the units. Akzo sites are in Ohio, Texas and Georgia; PPG sites are in Pittsburgh and four states.
“We still have a lot of work to do,” CEO Charles E. Bunch said.
Even so, the record sales and earnings per share came from “continued strong performance of our coatings businesses,” which increased its earnings by 25 percent compared with last year's record level, he said.
Profit for the quarter was $341 million, or $2.35 a share, compared with a profit of $362 million, or $2.34 a share, last year. Revenue jumped to $4.1 billion compared with $3.5 billion last year.
PPG shares jumped 2 percent, closing at $160, up $3.14. The stock is up 18.2 percent this year.
PPG's coatings business benefited from sales to auto manufacturers, automotive refinishers and aerospace markets. Sales rose in optical and specialty materials segments compared with a year ago, Bunch said. Profit from PPG glass business declined in challenging market conditions, he said.
“Glass margins were pretty ugly,” said Goldman Sachs analyst Robert Koort during PPG's conference call with analysts.
Glass, the product that gave the company its Pittsburgh Plate Glass name from 1883 to 1968, accounted for just 6.5 percent of sales during the quarter, down from 27 percent a decade ago.
Sales in the period were $269 million, down 4 percent. Earnings for the segment were $8 million, down from $23 million, as the profit margin fell to 3 percent from 8.4 percent last year.
“It was a disappointing quarter for glass,” Bunch said. He expects a pickup in the construction market for flat glass products in the third quarter, but not Fiberglas.
“Glass continues to be part of PPG's portfolio,” said spokesman Bryan Iams.
Bunch said PPG continues to pursue possible acquisition candidates: “We are confident we can continue to make acquisitions and achieve the (financial) targets we set for them.”
Other recent acquisitions and divestitures by PPG include the $2.2 billion sale at the end of the year of its commodity chemicals business, which produces chlorine, caustic soda and other chemicals, to Georgia Gulf Corp. The combined company was renamed Axiall Corp.
Another was the purchase of waterborne and chrome-free coating technology from Deft Inc. of Irvine, Calif., for an undisclosed price — a deal that will strengthen PPG's aerospace coatings business.
John D. Oravecz is a Trib Total Media staff writer. Reach him at 412-320-7882 or email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Minorities crucial to filling Marcellus shale gas drilling jobs
- Samsung introduces free streaming radio service
- Coca-Cola CEO’s pay, bonus drop
- Cabbies protest ride startups
- Fraud charges stand for Facebook claimant
- Car only as good as its tires
- Demand grows for digital deal suppliers
- Encouraging employment report fails to stir much excitement to stock markets
- U.S. trade deficit rose to $39.1 billion in January
- Consumer borrowing increased by $13.7 billion in January
- Natural gas industry buoyed by advancing technology