PPG Industries“ chairman and chief executive officer Charles E. Bunch continues to be optimistic about the company“s future. He outlined PPG“s progress toward achieving its vision and implementing …
PPG Industries“ chairman and chief executive officer Charles E. Bunch continues to be optimistic about the company“s future. He outlined PPG“s progress toward achieving its vision and implementing its strategy at the company“s annual meeting of shareholders on 19 April 2007. “Our strategies are sound. We are adapting and changing to meet the challenges we face. And we are taking decisive steps that will accelerate our profitable growth, strengthen our businesses and enable PPG to continue its tradition of rewarding shareholders,” Mr. Bunch said. Sales were up 8% in 2006 to a record USD 11 billion. In addition, the company“s Industrial Coatings, Performance and Applied Coatings, and Optical and Specialty Materials businesses all had double-digit sales increases. Overall, PPG“s reported earnings for 2006 were USD 4.27 a share, up 22% increase over the previous year. In his remarks, Mr. Bunch discussed key components of two strategies for PPG: accelerating profitable growth and strengthening its businesses. In regard to accelerating profitable growth, he told shareholders that the company“s strong organic growth in coatings, optical products and emerging regions was complemented by acquisitions. “Last year was one of our most acquisitive years on record,” he said. PPG spent in 2006 about USD 480 million on acquisitions, including the assumption of about USD 80 million in debt. “These acquisitions added approximately USD 380 million to PPG“s sales in 2006. In 2007, we expect these same acquisitions to generate full-year sales of between USD 700 and USD 800 million,” he said. “Our strategy also involves moving down the value chain into new businesses that are “adjacent“ to our current businesses,” Mr. Bunch added. He cited several initiatives and ventures, including a joint venture with Devold to manufacture glass-fiber reinforcement fabrics used in turbine blades for the North American wind energy market and a facility in Allentown, Pennsylvania, where PPG is making high-quality, double-pane insulating glass units for home windows. Mr. Bunch also discussed PPG“s efforts in innovation, categorizing the company“s research and development into four “mega-trends”: security, energy efficiency, environmentally-friendly products and comfort. In regard to PPG“s strengthening of its businesses, he said that “over the last 10 years, the company has driven nearly USD 800 million of manufacturing efficiencies and cost reductions in its businesses.” Over the past four years, he added, PPG has significantly increased capital spending outside of acquisitions. “We“re investing in projects that help us renew technology and/or improve efficiency,” he said. Mr. Bunch noted that the company is continuing to aggressively explore all alternatives for its Automotive OEM and Replacement Glass and Services businesses and its Fine Chemicals business. “The goal, very clearly, is to maximize shareholder value. These alternatives may include restructuring, forming strategic alliances and/or divesting the businesses,” he said. “As I look forward to the rest of this year, PPG is operating in a very dynamic, global economy,” Mr. Bunch said. “Although we“ve seen some slowing growth in North America, we still have plenty of opportunities for rapid growth in our emerging markets where we“re very well-positioned.” PPG shareholders elected three incumbent directors: James Berges, partner at Clayton, Dubilier & Rice and retired president of Emerson Electric Co.; Erroll Davis Jr., chancellor of the University System of Georgia and former chairman and chief executive officer of Alliant Energy; and Victoria Haynes, president and chief executive officer of RTI International. Shareholders also endorsed the appointment of Deloitte & Touche LLP as the company“s independent registered public accounting firm for 2007. In addition, shareholders voted to implement a majority vote standard for the election of directors in all uncontested elections, retaining a plurality standard in contested elections, and to eliminate cumulative voting in all elections of directors, which were conditioned on each other. Lastly, shareholders approved a shareholder proposal related to future severance agreements with senior executives.