PITTSBURGH – PPG Industries reported sales for the second quarter of $3.1 billion, a decline of 30 percent versus the prior year’s second quarter, including a 6 percent decline resulting from a business divestiture in 2008. The company reported net income of $146 million, or 89 cents per share. Adjusted net income was $148 million, or 91 cents per share. Second-quarter 2008 sales were $4.5 billion and reported net income was $250 million, or $1.51 per share, and adjusted net income was $275 million, or $1.66 per share.
Sales in the quarter were down $1.4 billion, including a $253 million impact from the divestiture of a majority interest in the automotive glass and services (AG&S) business. Sales declined in all major regions of the world, with negative foreign currency translation a contributing factor in the decrease.
Second-quarter 2009 net income includes an after-tax charge of $2 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, which is pending court proceedings. Reported second-quarter 2008 net income included one-time, after-tax charges related to PPG’s AG&S business of $23 million, or 14 cents per share, and an after-tax charge of $2 million, or 1 cent per share, for the proposed asbestos settlement.
“While sales and earnings were down versus last year, our cash generation was up 25 percent and our earnings rose considerably in comparison to the previous two quarters,” said Charles E. Bunch, PPG Chairman and Chief Executive Officer. “Clearly, we are continuing to experience very challenging conditions in many of our end-use markets. However, we are encouraged as our total sales during the quarter remained fairly consistent month to month, and were also steady within each major region. This gives us a degree of confidence that most markets have stabilized, albeit at considerably lower levels than prior years.”
Bunch said that PPG’s coatings segments combined with its Optical and Specialty Materials segment accounted for 90 percent of total segment earnings and were considerably stronger than last quarter. “Specifically, our Architectural Coatings – EMEA and Performance Coatings segments delivered nearly flat year-over-year earnings in local currencies, which is a noteworthy achievement, especially when considering the volume headwinds related to the weakened economy,” he said.
“Looking ahead to the third quarter, we expect overall market demand to improve, but only mildly,” Bunch said. He noted that the third quarter is traditionally a slower period due to seasonal trends in PPG’s businesses. “We expect sequential improvement in the U.S. automotive OEM market, but we expect the opposite for commodity chemicals.”
Bunch said that PPG ended the quarter with more than $1 billion of cash on hand and that the company intends to remain very prudent regarding the management of its cash position.