PPG: record 4Q, full year sales for 2006

PPG Industries has reported record sales for the 4Q 2006 of USD 2.8 billion, 11% higher than the record sales for the 4Q 2005. Net income in the 4Q 2006 was USD 157 million, or USD 0.94 a share. Net i…

PPG Industries has reported record sales for the 4Q 2006 of USD 2.8 billion, 11% higher than the record sales for the 4Q 2005. Net income in the 4Q 2006 was USD 157 million, or USD 0.94 a share. Net income includes an aftertax charge of USD 3 million to reflect the net increase in the current value of the company“s obligation under its proposed asbestos settlement agreement reported in May 2002, which is subject to pending court proceedings. Net income for the 4Q 2005 was USD 113 million, or USD 0.68 a share. This included aftertax charges of USD 17 million, for the impairment of certain assets in the company“s specialty chemicals business; USD 10 million for direct costs related to hurricanes Katrina and Rita; and USD 3 million to reflect the net increase in the value of the company“s obligation under its proposed asbestos settlement agreement. Sales were USD 2.5 billion. For all of 2006, PPG recorded net income of USD 711 million including aftertax charges of USD 106 million for estimated legacy environmental remediation costs at sites in New Jersey and Louisiana; USD 26 million for legal settlements; USD 23 million for business restructuring; and USD 17 millionto reflect the net increase in the current value of the company“s obligation under the proposed asbestos settlement agreement. Net income also includes aftertax earnings of USD 24 million for insurance recoveries. Sales for 2006 were USD 11.0 billion, a record for any year. For all of 2005, PPG recorded net income of USD 596 million including aftertax charges of USD 128 million for legal settlements; USD 21 million for direct costs related to hurricanes Katrina and Rita; USD 17 million for the impairment of certain assets in the company“s specialty chemicals business; USD 12 million for debt refinancing; and USD 13 million to reflect the net increase in the value of the company“s obligation under its proposed asbestos settlement agreement. Net income also included aftertax earnings of USD 11 million for insurance recoveries. Sales for 2005 were USD 10.2 billion, a record at that time. “In the 4Q [2006], we are pleased to achieve year-over-year double-digit percentage growth in both sales and earnings per share, despite weakening in several US end markets and related temporary facility shutdowns by customers,” said Charles E. Bunch, chairman and chief executive officer of PPG. “In addition to the strong sales and earnings growth in our coatings and optical products businesses, we also saw improvement in our glass results due to actions taken in several of these businesses”. “For the full year, we also delivered double-digit percentage sales increases and related earnings growth in both our coatings and optical products businesses … while sales in our glass business segment were flat, our earnings improved,” Bunch said. “Looking forward, while we see some ongoing challenges entering 2007 due to continued softness in a few US customer markets, we anticipate that solid global economic conditions will remain. At PPG, we expect to continue capitalizing on this environment with organic growth, especially in emerging regions. Also, our 2006 acquisitions will provide meaningful sales and earnings growth in 2007. Additionally, while we are pleased with recent trends, we continue to work very hard in several of our businesses that are underperforming. In 2007, we will aggressively explore all alternatives for these businesses with the ultimate goal of maximizing shareholder value. Finally, as evidenced in 2006, we remain committed to using our consistent track record of cash generation for the ongoing benefit of our shareholders”. Glass sales fell USD 35 million, or 6%, as a result of reduced volumes in all businesses. Strengthening foreign currencies were offset by a slight decrease in selling prices. Segment earnings were up USD 21 million due in large part to other income in the fiberglass business, including higher equity earnings. Also contributing to the increase in earnings were lower manufacturing and natural gas costs. The impact of reduced sales volumes, lower selling prices and higher overhead costs reduced earnings.