By Tess Stynes
PPG Industries said its second-quarter earnings fell 13% on
charges related to the paint manufacturer's cost-cutting efforts,
while negative currency impacts took a bigger bite out of
sales.
Shares fell 3.7% to $113.30 in recent trading.
Separately, the company also named Chief Operating Officer
Michael McGarry as its new chief executive starting in September.
Mr. McGarry has been chief operating officer for nearly a year,
adding the title of president in March. He will succeed Charles
Bunch, who will continue as executive chairman.
Mr. McGarry, 57 years old, is a 34-year veteran of the company
who in recent years helped lead efforts to increase its focus on
its paint and coatings, including the acquisition of coatings maker
SigmaKalon; the separation of PPG's former commodity chemicals
business; the acquisition of AkzoNobel's North American house-paint
business; and most recently PPG's $2.3 billion deal for Mexico's
Consorcio Comex SA, one of the largest paint manufacturers in North
America.
Mr. Bunch, who joined the company in 1979, has been CEO since
March of 2005, adding the role of chairman that July.
While its international expansion has boosted overall sales,
like other big U.S. companies seeking growth abroad, PPG has seen a
stronger U.S. currency weigh on its revenue growth.
In the latest quarter, negative currency fluctuations cut PPG's
sales by $320 million, compared with $260 million in the first
quarter and about $130 million during the fourth quarter of last
year.
PPG, whose paint brands include Olympic and Glidden, also has
been aiming to rein in costs. In April the company unveiled a
restructuring plan that aims for annual pretax savings of $100
million to $105 million by 2017, including partial-year savings of
$15 million to $20 million this year.
Overall, PPG reported a profit of $337 million, or $1.23 a
share, down from $386 million, or $1.38 a share, a year earlier.
Excluding restructuring-related charges and other items, per-share
earnings from continuing operations rose to $1.67 from $1.42.
Revenue edged up 0.4% to $4.1 billion. Excluding currency
fluctuations, sales rose 8%. Acquisitions contributed most of the
growth, while sales volume grew 1%.
Analysts polled by Thomson Reuters expected per-share profit of
$1.64 and revenue of $4.16 billion.
Mr. Bunch said that "based on current foreign exchange rates and
the seasonality of our businesses, we expect negative foreign
currency translation impacts to remain sizable but to moderate in
the second half of the year."
Earlier on Thursday, rival Sherwin-Williams Co. cut its earnings
outlook for the year and provided a disappointing third-quarter
forecast, as the stronger dollar has hurt demand for the company's
paints in certain markets.
For PPG, its performance coatings segment sales increased
roughly 3% to $2.41 billion, mostly thanks to the Comex
acquisition. Organic sales growth continued in the aerospace and
automotive refinish coatings businesses. Architectural coatings
volumes in the U.S. and Canada grew by low-single-digit
percentages.
Industrial coatings sales dropped 3% to $1.41 billion, as growth
in sales volume and a boost from acquisitions was offset by
negative currency impacts.
Write to Tess Stynes at tess.stynes@wsj.com
Access Investor Kit for Akzo Nobel NV
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=NL0000009132
Access Investor Kit for Akzo Nobel NV
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0101993055
Access Investor Kit for PPG Industries, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6935061076
Subscribe to WSJ: http://online.wsj.com?mod=djnwires