PPG chairman reviews transformation of firm

Charles E. Bunch, chairman and chief executive officer of PPG Industries, described for investment analysts in New York on 13 June 2008 how much the company has changed in the past several years based…

Charles E. Bunch, chairman and chief executive officer of PPG Industries, described for investment analysts in New York on 13 June 2008 how much the company has changed in the past several years based on several strategic initiatives undertaken to focus on coatings and specialty products. Mr. Bunch said that PPG is “continuing to enhance our geographic presence, strengthen our portfolio and optimize growth opportunities”. He pointed out that today only 45% of PPG“s sales are in the United States and Canada, and more than 80% of the company is now focused on coatings and optical and specialty products. He added that PPG“s US and Canadian businesses in both architectural coatings and glass, along with its automotive OEM coatings and glass businesses, represent only 15% of the company“s current reported sales. “With this stronger portfolio, we are better equipped to withstand individual end-market weakness,” he said. Mr. Bunch outlined his thoughts on global economic conditions, citing the need to closely manage inflationary increases such as freight, raw materials and energy. He said that PPG“s 2Q natural gas unit costs will be about USD 10.50 per MMBTU and the company has about one-third of its natural gas needs hedged at about USD 8.50 per MMBTU for the 2H 2008. Mr. Bunch also reiterated the company“s previous coatings raw material guidance range for the 2Q of 2% to 4%, and he said that PPG is currently negotiating prices and believes that its 2H range will be slightly higher, between 4% and 6% year over year. Mr. Bunch added that the “range of raw material inflation differs by geography, with the US range higher and the ranges in other parts of the world generally lower”. Mr. Bunch said that PPG is currently working on additional pricing initiatives with customers to “offset this inflation impact,” which he said PPG has successfully done in the past, including a few years ago when inflation rates were much higher. Pointing out the significant regional differences in economic conditions, Mr. Bunch said, “Our growth rate outside the United States and Canada – which represents about 55% of our total company – averaged about 6% in the 1Q”. “We continue to see a solid, albeit slightly slowing, European economy. Both the Asian and Latin American regions remain very strong in general,” he said. “Looking ahead, the 2Q business activity trends for PPG are generally similar to what we saw in the 1Q”, Mr. Bunch added. “We continue to see solid growth rates outside the United States, and the US market remains somewhat challenging, but we are managing it effectively”. Mr. Bunch reviewed some of the businesses the company calls “growth drivers,” which are providing high-growth potential. These are PPG“s aerospace, optical and specialty products, and protective and marine coatings businesses, combined with its Asian, Eastern European and Latin American regions. Mr. Bunch said that PPG “will likely be discussing a variety of different transactions or structures” for its automotive glass and services business and is encouraged by the prospects of completing a transaction this year. The meeting was webcast and accessible through the Investor Center of PPG“s web site. A replay of the webcast will be available on the PPG site for six months following the meeting.