20 May 1999: PPG Industries, the US-based manufacturer of coatings, fibre glass, glass and chemicals, reported first-quarter sales of US$ 1.8 billion and net income of US$ 123 million including an aft…
20 May 1999: PPG Industries, the US-based manufacturer of coatings, fibre glass, glass and chemicals, reported first-quarter sales of US$ 1.8 billion and net income of US$ 123 million including an after-tax restructuring charge of US$ 20 million, related to integration of recent packaging coatings acquisitions. The packaging coatings restructuring, involves disposal of a redundant facility and work force reductions, mainly in Europe. In comparison, first quarter 1998 net income was US$ 192 million on sales of US$ 1.91 billion. According to board chairman and CEO, Raymond Le Boeuf, North America and Europe“s basic manufacturing sectors are experiencing deflationary pressures, with margins squeezed by declining prices. Negative trends that began last year, associated with the troubled economies of Asia and now Brazil, persisted through the first quarter. Glass segment sales declined from the record level of a year ago, because of the divestment of European flat and automotive glass operations in mid 1998. Effects of low-priced Asian fibre glass, particularly for use in electronics production, also contributed to lower sales and operating earnings. On a more positive note, Le Boeuf remarked that the US economy is continuing to perform well, with strong auto sales and housing starts and that “1999 is shaping up as an exciting year”. He said that PPG “is prepared to weather any economic downturns that might occur”. PPG aims to sustain growth with profitable acquistions and investment in steady-growth, higher-margin businesses, whilst reinforcing competitiveness and profitability by heightening supplier involvement in pursuit of innovative technology and greater quality and efficiency. Le Boeuf said that the 1998 sale of European flat and automotive glass operations and closing of a speciality glass plant in Georgia, and pending disposal of Chinese glass interests, should enhance PPG“s performance significantly. He added that economic conditions make it unlikely that PPG can achieve “Challenge 2000” goals of US$ 10 billion in sales and earnings of US$ 7 next year. But if the company outperforms the Standard & Poor“s 500 index, he added, “we“ll send a strong signal to the financial marketplace that, yes, PPG is a company that can and will generate premium earnings growth and therefore a premium return to shareholders”.