PPG Announces Earnings Guidance, Plans to Cut 2,000 Employees
PITTSBURGH – In reporting its earnings guidance for the first quarter of 2012, PPG Industries announced plans to reduce its workforce by 2,000 employees. The planned cuts are a result of sluggish demand in Europe. Excluding nonrecurring charges related to the workforce reduction, environmental remediation and acquisition-related expenses, the company expects first-quarter earnings per share to exceed those of the first quarter of 2011.
The company will report nonrecurring charges in the first quarter 2012 related to business restructuring, environmental remediation and acquisition-related expenses. As a result, the company expects first quarter 2012 earnings per diluted share in the range of 2 to 7 cents. Adjusted earnings per diluted share for the quarter, excluding the nonrecurring charges, are expected to be between $1.75 and $1.80. This compares with reported earnings per diluted share of $1.40 in the first quarter 2011. There were no nonrecurring charges in the first quarter 2011.
“Our expected first-quarter operating results provide further evidence of the continuing strength and consistent earnings growth potential of our business portfolio,” said Charles E. Bunch, PPG Chairman and CEO. “During the quarter, we saw the overall pace of business activity improve compared with the fourth quarter 2011. This trend was aided by modest customer restocking and normal seasonal factors, and lower natural gas costs in the United States are also contributing to our results.
“In general, business conditions during the quarter were strong in North America and solid in Asia and other emerging regions,” Bunch said. “PPG benefited from year-over-year growth in several end-use markets, including aerospace, optical, automotive OEM (original equipment manufacturer) and industrial. Also, our architectural coatings business in the United States benefited from early signs of a construction recovery and mild winter weather, but overall industry demand remained well below historical levels. Lastly, demand in Europe was muted, and we expect economic recovery to occur slowly in that region.”
For the first quarter, PPG will report an after-tax charge of approximately $164 million, or $1.06 per diluted share, related to business restructuring actions, the majority of which will occur in Europe. Bunch said the restructuring actions will impact about 2,000 employees, primarily in PPG’s global architectural coatings businesses, and in other PPG businesses and administrative functions in Europe, where some actions will be implemented following consultation with applicable works councils. “These cost-reduction actions, while always difficult decisions, are needed to ensure that our cost structure is appropriate for business conditions and that all of our operations remain competitive globally,” he said.
When completed, PPG expects that the restructuring actions should result in annualized, pretax savings of about $140 million, with 2012 partial-year savings of between $40 million and $50 million.
PPG will issue its final first quarter 2012 earnings news release April 19, with additional, in-depth commentary and financial data.
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