PITTSBURGH – PPG Industries has reported record sales for the third quarter of $4.2 billion, surpassing the prior year’s third-quarter results by 37 percent. Third-quarter reported net income was $117 million, or 70 cents per share. Adjusted net income excluding unusual items was $227 million, or $1.37 per share.
“Our financial performance this quarter demonstrates both the successful execution of our transformation strategy and the continued strength of our commodity chemicals business,” said Charles E. Bunch, PPG Chairman and Chief Executive Officer. “Over the past several years, we have become a more resilient company by expanding our geographic reach, entering new end markets, and strengthening our ability to generate cash. In the quarter, our adjusted earnings per share were comparable with last year despite the negative impacts from two U.S. Gulf Coast hurricanes and significantly weaker automotive OEM production.”
During the quarter, the company finalized the sale of an approximate 60-percent interest in its automotive glass and services business, and it announced business restructuring that will result in expected savings at an annual run rate of approximately $100 million by the end of 2009.
Reported third quarter 2008 net income includes after-tax charges of $110 million, or 67 cents per share, for business restructuring and $3 million, or 2 cents per share, 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 pending court proceedings. Net income also includes an after-tax gain of $3 million, or 2 cents per share, on the divestiture of the automotive glass and services business.
Performance Coatings segment sales in the third quarter 2008 increased $266 million, or 28 percent, versus the prior year’s quarter. Sales grew as a result of acquisitions, most notably the SigmaKalon protective and marine coatings business, higher pricing in all businesses and currency gains. Volumes were flat, as declines in the U.S. architectural coatings business were offset by growth in all other business units. Segment earnings improved by $8 million, or 6 percent, mostly due to the positive performance of acquisitions.
Industrial Coatings segment sales for the quarter increased $121 million, or 13 percent, due primarily to the acquisition of SigmaKalon’s industrial coatings business, stronger foreign currencies and improved selling prices. Volumes were lower, particularly sales in the automotive OEM industry. Segment earnings decreased by $41 million, or 46 percent, due to the negative effects of lower volumes and inflation.
The Architectural Coatings EMEA (Europe, Middle East and Africa) segment represents the largest business from the SigmaKalon acquisition. Segment sales for the quarter were $632 million, up a double-digit percentage over SigmaKalon’s corresponding sales in 2007. Segment earnings were $61 million and included a combined $30 million of ongoing quarterly depreciation expense and amortization related to acquired intangible assets.