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PPG: new chief looks to expand and acquire

The incoming chairman of PPG Industries Inc. expects the firm to grow by acquiring mainly coating and optical products businesses and expanding in regions such as Asia and Eastern Europe that are set …

The incoming chairman of PPG Industries Inc. expects the firm to grow by acquiring mainly coating and optical products businesses and expanding in regions such as Asia and Eastern Europe that are set for industrial growth. Charles E. Bunch, PPG“s president and chief executive officer, who will assume the chairmanship when the current post holder Raymond W. LeBoeuf retires on 1 July 2005, said 21 April 2005 that PPG was in a strong position to look for acquisitions, with USD 700 million in cash and short- term investments on hand. Bunch told shareholders at his first meeting as CEO that the firm has been looking at a lot of acquisition prospects. However, he cautioned against expecting PPG to invest as much in acquisitions as it did under LeBoeuf, who oversaw a USD 2 billion spending spree. Bunch envisions buying small-to-medium size companies with annual sales of up to USD 250 million. Bunch, 55, was named CEO, effective 31 March 2005, the day LeBoeuf announced his retirement, and will become chairman when the 58-year-old LeBoeuf leaves. Bunch joined PPG in 1979 as assistant to the corporate controller and, among other jobs, spent six years in Europe managing PPG glass operations. He became senior vice president for strategic planning and corporate services in 1997, executive vice president in 2000 and president and chief operating officer in 2002. “I“ve been at PPG for 26 years and have a good understanding of what we“re doing,” Bunch said in an interview after the annual meeting. “The timing is good because we have the strongest balance sheet in years … and the overall direction of the economy is still strong.” Bunch“s main worry is the rising cost of energy and raw materials. PPG is looking at alternative sources to cut costs and is hoping the Bush administration can put in place more effective energy policies, Bunch said. “When you“re under pressure of increasing raw material costs, it“s an opportunity to look at other suppliers.,” Bunch said. “We“re doing what we can to deflect cost increases.” On 21 April 2005, PPG reported 1Q net income of USD 95 million, or USD 0.55 a share, down from USD 119 million or USD 0.69 per share in the year-ago quarter. The results included after-tax charges of USD 91 million, or USD 0.52 per share for settlement of a case involving a defective wood treatment product made by PPG, and USD 5 million, or USD 0.03 per share, to cover an increase in the company“s obligation to settle asbestos litigation resulting from its involvement in the bankrupt Pittsburgh Corning Corp. Without the nonrecurring legal charges, net income totaled USD 186 million, up 56% from a year ago, on record 1Q sales of USD 2.5 billion that were helped by a 34% jump in chemicals sales. The adjusted per-share earnings were USD 1.10, better than analysts“ estimates of USD 1.06. Also on 21 April 2005, the company“s board of directors raised the quarterly dividend on its common stock to USD 0.47 from USD 0.45 per share, payable 10 June 2005 to shareholders of record on 10 May 2005. “As a person about to be on a fixed income, the 2-cent dividend increase is greatly appreciated,” LeBoeuf joked. The company further announced on 21 April 2005 that director Allen J. Krowe has retired from the board. PPG said in a document filed with the Securities and Exchange Commission that Krowe, a director since 1987, stepped down in accordance with the company“s retirement policy.

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