PPG sees growth potential rising in East
Coming off a year when sales topped $10.2 billion, PPG Industries Inc. is targeting China's booming economy for continued growth in 2006, CEO Charles E. Bunch told shareholders on Thursday.
Bunch also said at PPG's annual meeting at Heinz Field that the chemicals, coatings and glass-making giant is looking at acquisitions this year but has no specific timetable. Its focus is on the coatings and optical businesses, with an emphasis on the Asian market, Bunch said.
PPG is focusing on China and the Asian market because its coating sales there have more than doubled in the past seven years, increasing at an 18 percent rate. Almost 10 percent of its $5.5 billion coating sales last year came in the Asian market, Bunch said.
PPG expects to benefit from the boom in China's automotive production, which reached 5 million units last year, placing it third behind the U.S. and Japan, Bunch said. That's good news for PPG, which is the second largest paint supplier to the auto industry.
"I think we have a broad play" in China, which also offers excellent potential for the architectural coatings, industrial coatings and refinishing markets, he said.
Sales for PPG's Transition eye lenses also have grown at an annual rate of 18 percent, said Bunch, who sees an opportunity for Transitions' growth as plastic lenses become more popular in China.
The company's chemical sales surpassed the glass segment in 2005, generating $2.39 billion in sales. Only the glass segment, which generated $2.23 billion in sales last year, was flat, Bunch said.
A dark cloud for PPG is the rising costs of energy and raw materials that hit in the fourth quarter and are resurfacing. PPG has been hit with a $200 million increase in its energy costs in the past year because of rising natural gas prices, Bunch said.
PPG compensated for those rising costs by hiking prices 4 percent and growing the business.
PPG yesterday reported first quarter net income of $184 million, or $1.11 a share, on sales of $2.64 billion, compared with a net income of $95 million, or 55 cents a share, on sales of $2.5 billion in the first quarter 2005.