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PPG Reports Record Third-Quarter Sales; Marks 10th Consecutive Quarter of Year-over-Year Sales Records

Published on 2005-10-24. Author : SpecialChem

PITTSBURGH -- PPG Industries (NYSE:PPG) reported third quarter net income of $157 million, or 92 cents a share, including aftertax charges of $25 million, or 15 cents a share, for net legal and insurance settlements; $11 million, or 6 cents a share, for direct costs related to the impact of hurricanes Katrina and Rita; and $3 million, or 2 cents a share, to reflect the net increase in the current value of the company's obligation under its asbestos settlement agreement reported in May 2002. The company estimates that aftertax earnings were also reduced by approximately $6 million, or 4 cents a share, due to lower sales volumes resulting from the hurricanes.

On Sept. 26, following Hurricane Rita, PPG declared force majeure for products produced at its Lake Charles, La., chemical complex. The damage caused by Hurricane Rita resulted in the shutdown of the Lake Charles facility for a total of eight days in September. On Oct. 6, the facility resumed production at reduced operating rates and has increased production throughout the month.

The majority of the net charges for legal and insurance settlements relate to a settlement reached this week on a civil glass antitrust matter. The case was first filed in 1997 and is pending in federal court. The settlement remains subject to the court's final approval.

Sales were $2.55 billion, a record for the third quarter.

That compares with third quarter 2004 net income of $194 million, or $1.12 a share, including an aftertax charge of $4 million, or 3 cents a share, to reflect the net increase in the current value of the company's obligation under its asbestos settlement agreement. Sales were $2.41 billion.

For the first nine months of 2005, PPG recorded net income of $483 million, or $2.81 a share, which includes aftertax charges of $116 million, or 67 cents a share, for net legal and insurance settlements; $11 million, or 6 cents a share, for direct costs related to the impact of hurricanes Katrina and Rita; $12 million, or 7 cents a share, for debt refinancing; and $10 million, or 6 cents a share, to reflect the net increase in the value of the company's obligation under the asbestos settlement agreement. The company estimates that aftertax earnings were also reduced by approximately $6 million, or 4 cents a share, due to lower sales volumes resulting from the hurricanes. Sales for the first nine months of 2005 were $7.70 billion.

For the first nine months of 2004, PPG recorded net income of $500 million, or $2.89 a share, including an aftertax charge of $13 million, or 8 cents a share, to reflect the net increase in the value of the company's obligation under the asbestos settlement. Sales were $7.10 billion.

"We delivered record third-quarter sales, and our operating performance was outstanding, despite a variety of significant economic headwinds," said Charles E. Bunch, chairman and chief executive officer. "This is the 10th consecutive quarter we've generated year-over-year record sales. In fact, all six of our coatings businesses and our chemicals segment set third-quarter sales records.

"We remain excited about our growth prospects, fueled by a strong array of products and a growing presence in emerging markets. We believe this will enable us to continue generating strong cash flows, which have been and will be used to benefit our shareholders."

Coatings sales increased $78 million, or 6 percent, as a result of improved selling prices across most businesses, strengthening foreign currencies and higher volumes, primarily in aerospace and architectural. Operating earnings were up $11 million due to the benefits of higher selling prices, higher other income due to the favorable impact of several insurance settlements and higher volumes, which more than offset the negative impact of inflation, primarily high raw materials costs.

Glass sales decreased $5 million, or 1 percent, due to lower volumes across all businesses except automotive replacement glass and lower selling prices, which were partially offset by the impact of strengthening foreign currencies. Operating earnings were down $82 million largely due to the adverse impact from the settlement of the civil glass antitrust matter. Additionally, inflation, including higher energy costs, and lower volumes exceeded the benefits from improved manufacturing efficiencies.

Chemicals sales increased $65 million, or 12 percent, due primarily to higher selling prices for chlor-alkali products. These increases were slightly offset by lower volumes for chlor-alkali products including the unfavorable impact of the hurricanes. Operating earnings were up $26 million primarily due to higher selling prices, which exceeded the impact of higher energy costs, lower manufacturing efficiencies and the impact of the hurricanes.

Forward-Looking Statement

Statements in this news release relating to matters that are not historical facts are forward-looking statements reflecting the company's current view with respect to future events and financial performance. These matters involve risks and uncertainties that could affect the company's operations, as discussed in PPG Industries' periodic reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Accordingly, many factors could cause actual results to differ materially from the company's forward-looking statements.

Among these factors are increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, which also depends on economic and political conditions, foreign exchange rates and fluctuations in those rates, and the unpredictability of possible future litigation, including litigation that could result if the asbestos settlement discussed in PPG's reports filed with the Securities and Exchange Commission does not become effective. Further, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.

Consequences of material differences in results as compared with those 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 the company's consolidated financial condition, operations or liquidity.

Source: PPG Industries


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