On 21 January 2010, PPG Industries reported fourth-quarter 2009 sales of USD 3.1 billion, down 2% compared to the same period of the prior year. Reported net income for the quarter went up to USD 142 …
On 21 January 2010, PPG Industries reported fourth-quarter 2009 sales of USD 3.1 billion, down 2% compared to the same period of the prior year. Reported net income for the quarter went up to USD 142 million, or 85 cents per share, while fourth-quarter 2008 sales were USD 3.2 billion, and reported net income was USD 71 million, or 43 cents per share. PPG“s fourth-quarter 2009 adjusted net income came to USD 144 million, or 86 cents per share, compared to fourth-quarter 2008 adjusted net income of USD 68 million, or 41 cents per share. Fourth-quarter 2009 reported net income included an after-tax charge of USD 2 million, or 1 cent per share, in reflection of the net increase in the current value of the company“s obligation under its proposed asbestos settlement, which is pending court proceedings. According to Charles E. Bunch, PPG chairman and CEO: “The fourth quarter of 2009 capped what was a challenging year. The global recession was both steep and broad, and it adversely affected many of our end-use markets. PPG reacted decisively by implementing aggressive restructuring and cost-reduction actions. The impact of these efforts is clearly evident in our fourth-quarter and full year financial results. Led by our coatings and Optical and Specialty Materials segments, we have continued to realize positive momentum in our financial performance. These segments performed well and delivered higher year-over-year earnings in the quarter.” He also noted that results from the company“s Performance Glazings business and Commodity Chemicals segment were weak compared to the same quarter of the prior year and to the seasonally stronger third quarter because of challenging economic conditions. “While our earnings still have not fully recovered, I am pleased with the pace of our improvement given the continued challenges in the global economy,” Bunch said. “A primary driver of this improvement has been the completion of our restructuring actions ahead of schedule. These actions have benefited us in 2009 and will do so to a greater degree in 2010.” Bunch pointed to PPG“s Industrial Coatings segment as an example, with improved earnings of USD 129 million in the quarter versus the same period of 2008. “This significant change in performance provides evidence that actions taken by PPG during the recession have reduced our cost structure and provided us with solid earnings leverage as volumes gradually return,” he said. “We delivered strong and near-record cash from operations in 2009,” Bunch continued. “Doing so despite the recession provides continued validation of the success of the strategic direction and actions we have taken over the past few years to transform the company.” Bunch also said that PPG paid down about USD 675 million of debt in 2009, raising its annual dividend payout again. “As we begin 2010,” Bunch said, “we are guardedly optimistic. While recovery in the global economy remains gradual, PPG is well-positioned in several ways. Our strong and growing presence in Asia will continue to yield benefits based on economic growth in the region. We will also realize an incremental USD 100 million of savings from our completed restructuring actions that will enable us to fully leverage anticipated higher full year global activity levels. And we have a strong cash position of just over USD 1 billion to support earnings growth opportunities.” Fourth-quarter sales for Performance Coatings in 2009 dropped USD 78 million, or 7%, and sales decreased due to lower volumes across all businesses and regions, with a volume decline similar to those seen in the first three quarters of 2009. Volume reduction was partially offset by favourable foreign currency and pricing gains. Segment earnings saw an improvement of USD 6 million, or 4%, since the lower sales volumes were offset by improved selling prices and lower costs, including the impact of aggressive cost management. Sales for the Industrial Coatings segment during the quarter increased USD 92 million, or 12%, thanks to higher year-over-year volumes in Automotive OEM Coatings and foreign currency. The trend of segment volume improvement compared to prior quarters continued thanks to gradual recovery in global industrial demand, as well as higher automotive production. Segment earnings for the quarter were USD 89 million, up USD 129 million from the same quarter in 2008, thanks to improved sales volumes leveraged by reduced costs, mainly from aggressive cost-savings initiatives and restructuring actions. Architectural Coatings segment sales in Europe, Middle East and Africa (EMEA) for the quarter were up USD 43 million, or 10%, mainly because of stronger foreign currencies, as well as acquisitions and price increases. Slightly lower volumes detracted from sales. Volumes decreased mid-single-digit percentages for the full year, and fourth-quarter results were slightly better. Segment earnings were up USD 11 million, as savings from cost-reduction initiatives and increased selling prices outpaced the impact of volume declines. Optical and Specialty Materials segment sales for the quarter increased 3% or USD 6 million, because of foreign currency, while year-over-year sales volumes declined by low-single-digit percentages. Segment earnings increased USD 14 million thanks mainly to lower costs. Commodity Chemicals segment sales for the quarter dropped USD 113 million, or 27%, caused by declines in year-over-year selling prices, which were partially offset by improved export volumes. Segment earnings were down USD 80 million due to lower selling prices, which were countered in part by higher volumes, lower energy costs, other cost-savings measures and higher equity income. Glass segment sales dropped USD 22 million compared with the same period in 2008, caused by lower volumes from reduced construction and general industrial demand. Pricing was also down because of lower energy and fuel surcharges. Segment income saw an increase of USD 8 million at USD 1 million, since the effects of lower sales were offset by lower costs and higher other income, particularly equity earnings. PPG“s 2009 tax rate from ongoing operations was 30% based on full year results, which included the geographic mix of earnings, which added 12 cents to fourth-quarter earnings per share, based on the catch-up of reducing the rate for the prior three quarters of 2009. The company anticipates a 2010 tax rate of 30%. For the entire 2009, sales totalled USD 12.2 billion and net income was USD 336 million, or USD 2.03 per share. Reported net income includes after-tax charges of USD 141 million, or 86 cents per share, for business restructuring and USD 8 million, or 5 cents per share, to reflect the net increase in the current value of the company“s obligation under its proposed asbestos settlement. Adjusted net income was USD 485 million, or USD 2.94 per share, as detailed in the Regulation G Reconciliation.