PPG to target key acquisitions in expansion plan
PPG Industries Inc., the world's largest paint manufacturer, said on Thursday it plans to spend up to $4 billion on acquisitions and to return cash to shareholders as it continues a growth strategy.
“We will continue to focus on growing the company through acquisitions and capital spending,” CEO Charles E. Bunch said after the company reported fourth-quarter net income that beat estimates.
PPG's results “caps off one of the most successful years in the company's history,” Bunch said.
PPG sold its commodity chemicals business for $2.2 billion in January; purchased AkzoNobel NV's North American architectural coatings unit for $1.05 billion in April, which moved PPG into the No. 1 spot in paint worldwide; and in July, announced the sale of its 51 percent stake in Transitions Optical, the inventor of plastic eyewear that darkens in bright sunlight, for $1.73 billion to partner Essilor International of France.
It will use money from the Transitions sale, $1.75 billion in cash on hand, plus cash generated in this year and in 2015, to fund that plan, without borrowing, said Chief Financial Officer Frank S. Sklarsky.
Acquisition talks are “very active from a discussion standpoint,” Bunch told analysts in a conference call. “We hope to realize some acquisition in 2014, but we are maintaining our disciplined approach.”
Over the last 15 years, and more aggressively during the last five, PPG has made 30 acquisitions that have moved it into the top position worldwide in paint — called “coatings” by the industry.
PPG's plan to spend $3 billion to $4 billion will include repurchasing its shares as well as acquisitions, Sklarsky said.
The Pittsburgh-based company repurchased $1 billion, or 5.7 million shares in 2013, including $680 million in the fourth quarter, and paid $350 million in dividends. Its stock rose to a high of $196.89 on Tuesday. Shares closed down $3.03 to $187.67 on Thursday. Seven of 19 Wall Street analysts who follow the company have a price target of $200 or above.
PPG reported fourth quarter net income of $254 million, or $1.78 a share, on revenue of $3.7 billion. That compares with net income in the same period a year ago of $227 million, or $1.46 a share, on revenue of $3.2 billion. The results exceeded Zacks consensus estimate of $1.73 per share.
Bunch said automotive and aerospace markets paced sales in its industrial coatings unit, up 10 percent, to $1.4 billion. And its performance coating segment, which includes automotive and aerospace refinishing markets, rose 25 percent to $1.2 billion during the quarter.
Full-year net income was $1.03 billion, or $7.21 a share, compared to $726 million, or $4.69 a share, in 2012. Revenue rose to $15.1 billion, from $13.5 billion a year earlier.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.
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