PPG Chairman Bunch Reviews Transformation of Company

Tag : optical coatings
Charles E. Bunch, chairman and chief executive officer of PPGIndustries (NYSE:PPG), described for investment analysts hereyesterday how much the company has changed in the past severalyears based on several strategic initiatives undertaken to focus oncoatings and specialty products.

Bunch said that PPG is "continuing to enhance our geographicpresence, strengthen our portfolio and optimize growthopportunities." He pointed out that today only 45 percent of PPG'ssales are in the United States and Canada, and more than 80 percentof the company is now focused on coatings and optical and specialtyproducts. He added that PPG's U.S. and Canadian businesses in botharchitectural coatings and glass, along with its automotive OEMcoatings and glass businesses, represent only 15 percent of thecompany's reported sales today.

"With this stronger portfolio, we are better equipped to withstandindividual end-market weakness," he said.

Bunch outlined his thoughts on global economic conditions, citingthe need to closely manage inflationary increases such as freight,raw materials and energy. He said that PPG's second quarter naturalgas unit costs will be about $10.50 per MMBTU and the company hasabout one-third of its natural gas needs hedged at about $8.50 perMMBTU for the second half of 2008. Bunch also reiterated thecompany's previous coatings raw material guidance range for thesecond quarter of 2 to 4 percent, and he said that PPG is currentlynegotiating prices and believes that its second half range will beslightly higher, between 4 and 6 percent year over year. Bunchadded that the "range of raw material inflation differs bygeography, with the U.S. range higher and the ranges in other partsof the world generally lower."

Bunch said that PPG is currently working on additional pricinginitiatives with customers to "offset this inflation impact," whichhe said PPG has successfully done in the past, including a fewyears ago when inflation rates were much higher.

Pointing out the significant regional differences in economicconditions, Bunch said, "Our growth rate outside the United Statesand Canada - which represents about 55 percent of our total company- averaged about 6 percent in the first quarter.

"We continue to see a solid, albeit slightly slowing, Europeaneconomy. Both the Asian and Latin American regions remain verystrong in general," he said.

"Looking ahead, the second quarter business activity trends for PPGare generally similar to what we saw in the first quarter," Bunchadded. "We continue to see solid growth rates outside the UnitedStates, and the U.S. market remains somewhat challenging, but weare managing it effectively."

Bunch reviewed some of the businesses the company calls "growthdrivers," which are providing high-growth potential. These arePPG's aerospace, optical and specialty products, and protective andmarine coatings businesses, combined with its Asian, EasternEuropean and Latin American regions.

Bunch also discussed the impact the $3.2 billion acquisition ofSigmaKalon has had on PPG's results, saying that the business todate has "exceeded our original estimates" and adding that PPGexpects the acquisition to "meet or exceed the overall full yearfinancial metrics the company set forth in January." He noted thatsales for the new Architectural Coatings EMEA (Europe, Middle Eastand Africa) reporting segment increased by just less than 20percent in the first quarter 2008 versus the previous year'speriod.

Bunch said that PPG "will likely be discussing a variety ofdifferent transactions or structures" for its automotive glass andservices business and is encouraged by the prospects of completinga transaction this year.

The meeting was webcast and accessible through the Investor Centerof PPG's Web site. A replay of the webcast will be available onPPG's site for six months following the meeting. For additionalinformation on the company's recent financial performance, pleasesee the company's first quarter earnings release, also found on theInvestor Center of PPG's Web site.

About PPG

Pittsburgh-based PPG is a global supplier of paints, coatings,chemicals, optical products, specialty materials, glass and fiberglass. The company has more than 150 manufacturing facilities andequity affiliates and operates in more than 60 countries. PPG'ssales in 2007 were $11.2 billion. SigmaKalon, a worldwide coatingsproducer based in Uithoorn, Netherlands, that PPG acquired Jan. 2,2008, had 2007 sales of $2.9 billion. PPG shares are traded on theNew York Stock Exchange (symbol: PPG). For more information, visitwww.ppg.com.

Forward-Looking Statements

Statements in this news release relating to matters that are nothistorical facts are forward-looking statements reflecting thecompany's current view with respect to future events or objectivesand financial or operational performance or results. These mattersinvolve risks and uncertainties as discussed in PPG Industries'periodic reports on Form 10-K and Form 10-Q, and its currentreports on Form 8-K, filed with the Securities and ExchangeCommission. Accordingly, many factors could cause actual results todiffer materially from the company's forward-looking statements.

Among these factors are increasing price and product competition byforeign and domestic competitors, fluctuations in cost andavailability of raw materials and energy, the ability to maintainfavorable supplier relationships and arrangements, difficulties inintegrating acquired businesses and achieving expected synergiesthere from, economic and political conditions in internationalmarkets, foreign exchange rates and fluctuations in such rates, theimpact of environmental regulations, unexpected businessdisruptions and the unpredictability of possible future litigation,including litigation that could result if the asbestos settlementdiscussed in PPG's filings with the SEC does not become effective.However, it is not possible to predict or identify all suchfactors. Consequently, while the list of factors presented here isconsidered representative, no such list should be considered to bea complete statement of all potential risks and uncertainties.Unlisted factors may present significant additional obstacles tothe realization of forward-looking statements.

Consequences of material differences in results as compared withthose anticipated in the forward-looking statements could include,among other things, business disruption, operational problems,financial loss, legal liability to third parties and similar risks,any of which could have a material adverse effect on PPG'sconsolidated financial condition, operations or liquidity.