18 Aug 2006
PPG Reports its 13th Consecutive Quarterly Sales Record
(August 18, 2006 Shanghai)Recently, PPG Industries Inc., the world’s leading diversified manufacturer headquartered in Pittsburgh, reported record sales and earnings for the second quarter of fiscal year 2006. The company realized net income of USD280 million on sales revenue of USD2.8 billion for the quarter, a year-on-year (Y-o-Y) growth of 21% and 6% respectively. During the quarter, in addition to the strong sales earnings growth, PPG was able to achieve higher margins of 14.5% from 14.1% despite an environment in which the chlor-alkali cycle, home building and North American auto manufacturing are approaching declines and higher raw material costs.
For the second quarter, PPG’s coatings businesses generated earnings surprises. Although the price of oil and raw materials remained high, sales reached USD1.6 billion, a 9% increase Y-o-Y. All six businesses within this segment, led by architectural, industrial and aerospace coatings, made record sales. In Asia, overall PPG’s coatings business increased by 21% in the second quarter. The margin increase from 14.5% to 15.5% in the coatings division was also significant.
PPG’s global merger and acquisition activities, via which PPG is able to rapidly raise its market share in key coatings segments and markets are beginning to make an impact on its sustained and rapid growth of PPG’s coatings businesses. These acquisitions include the recently announced acquisition of the performance coatings and finishes business of Ameron International Corporation, and Ameron’s 40% ownership in Oasis-Ameron, located in Saudi Arabia, enabling PPG to have a 12.6% share of the marine coatings market and consolidating its position in the architectural and industrial coatings markets. In addition, PPG has also acquired the remaining 50% share of Dongju Industrial Co., Ltd. from its partners. Dongju serves the automotive original equipment manufacture (OEM), refinish, industrial and packaging coatings segments in South Korea. By acquiring the remaining interest in Dongju, PPG will be able to strengthen their presence in the Asian coatings market and substantially improve the supply chain efficiencies in the region. These two acquisitions will contribute about USD400 million to its coatings revenue.
In Asia, Mr. Viktor Sekmakas, Managing Director of PPG Coatings Asia, announced during a global management meeting in March that PPG’s Asia Pacific development strategy and target is to achieve USD2 billion sales within 5 years. Mr. Sekmakas was recently named as Vice President of PPG Industries. To achieve the strategy of profitable growth, PPG has been looking for merger and acquisition opportunities. PPG acquired Crown Coatings of Singapore, a leading wood coatings company and moved it to China for production. For architectural coatings market, PPG expanded its distribution channels by acquiring certain assets of Shanghai Sunpool, who has been the sole distributor for its interior coatings brand Master’s Mark Paints. For fiber glass products, PPG and Nanya Plastics Corporation, a unit under Formosa Plastics Group of Taiwan, have built the world’s largest fiber glass manufacturing plant in Kunshan, with a potential output capacity of 120,000 metric tons.
"Our results demonstrate that we're achieving our objective of delivering profitable growth," said Charles E. Bunch, chairman and chief executive officer. "In coatings and optical products, which represent nearly two-thirds of our portfolio, our momentum continues. Collectively, coatings and optical products grew at more than 10 percent this quarter. Looking ahead, funding growth initiatives, such as the five acquisitions we announced in the second quarter, remains a priority for our free cash flow. Although growth is moderating to more sustainable levels in North America, we see continued economic expansion worldwide. As we have proven this past quarter, these economic conditions create meaningful opportunities for us to generate value for our customers and shareholders."
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About PPG：
PPG Industries Inc. was founded in 1883 in Pittsburgh, USA. As a global manufacturing enterprise, it produces and sells coatings, glass, fiber glass, and chemicals and holds a leading position in the above areas. Up to now, PPG has set up more than 108 production facilities that employ approximately 34,800 employees in 21 countries. PPG has been listed on Fortune 500 for 51 years and is world’s leading transportation coatings manufacturer, as well as World’s leading manufacturer of industrial, aerospace and packaging coatings. Each year, PPG invests millions of dollars in developing products, processes, and the newest technology to meet the market requirements. PPG is one of the few publicly traded companies to pay its shareholders dividends continually since 1899, and has paid increased shares to shareholders for 35 consecutive years. PPG has not just first class products but also unique cooperate culture which prides its employees. According to Fortune, PPG ranked No. 1 in the “Global Most Admired”, chemical industries in 2004.
PPG is also one of the few global coatings companies that first invested in China in 1980s. In China, PPG produces and sells seven major products, which includes automotive coatings, industrial coatings, automotive refinishing coatings, packaging coatings, aerospace coatings, architecture coatings, and fiber glass. There are 7 plants in Tianjin, Suzhou Kunshan and Zibo, and trading companies, offices, labs and training centers in Beijing, Shanghai, Suzhou, Guangzhou, Shenzhen. So far in China PPG has invested more than USD300 million and more than 2700 employees; in AP areas, its employees exceeded 6700.
In China, the main customers of PPG Automotive coatings include GM, GE, Benz, Dongfeng Citroen, Dongfeng Peugeot, Chery, and Hainan Mazda. Nearly all auto manufacturers use PPG automotive coatings and technology. As for packaging coatings, PPG provides coatings to Coca Cola, Pepsi, Lu Lu, Wangwang, etc. PPG provides aerospace coatings to Boeing, Air China, Southern Air, China Eastern etc. One thing that is especially meaningful is that Air China uses PPG coatings for the 3 2008 Olympics Plane and China Eastern uses the coatings for 2010 World Expo plane. Also, PPG provides its industrial coatings to Haier, Nokia, Motorola, Whirlpool and Dell and its architectural coatings are widely used in many well-known buildings such as Tian Anmen square, Beijing Oriental Plaza, Beijing International Exhibition Center, Beijing China Industrial & Commercial Bank, Beijing airport, Shanghai Jinmao Building, Shanghai Pudong International Airport, Shanghai Oriental Pearl Tower, Guangzhou Baiyun International Airport, Tianjin Jinhuang Building and Taida Building etc.