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Letter to the Editor
Tuesday October 30
PPG Industries Reports 4% Decrease in Sales Volume in North American Automotive Original, Refinish and Industrial Coatings
PPG Industries, in its Q3 filing, has reported that sales decreased 7 percent for the quarter of 2001 to $2 billion compared to $2.14 billion for the third quarter of 2000. The combination of a 7 percent volume decline across all business segments and a one percent decline from the negative effects of foreign currency translation primarily in the coatings segment contributed to the sales decline. These negative factors were partially offset by a one percent increase due to higher selling prices primarily in the glass segment.
The gross profit percentage decreased to 36.9 percent for the third quarter of 2001 compared to 37.6 percent for the third quarter of 2000. The decrease in the gross profit percentage was due to unfavorable sales mix changes primarily in the coatings and glass businesses.
Net income and earnings per share, diluted, for the third quarter of 2001 were $93 million and $0.55, respectively, compared to $150 million and $0.86, respectively, for the same quarter in 2000. Net income for the third quarter of 2000 included after-tax restructuring and one-time integration costs of $3 million related to PPG Auto Glass L.L.C. (PPG Auto Glass). Excluding these charges, net income and earnings per share, diluted, for the third quarter of 2000 were $153 million and $0.88, respectively. The decrease in net income was due to lower sales volumes across all of our businesses and higher environmental expenses offset, in part, by an increase in selling prices and by a lower effective tax rate.
Coatings sales decreased 6 percent to $1.07 billion compared to $1.13 billion for the third quarter of 2000. The combination of a decrease in sales volume of 4 percent, primarily in the North American automotive original, refinish and industrial coatings businesses, and a 2 percent decline from the negative effects of foreign currency translation contributed to the sales decline. Operating income for the third quarter of 2001 was $123 million compared to $164 million for the same quarter of 2000. The decrease in operating income is attributable primarily to lower sales volumes and higher environmental expenses.
Glass sales decreased 8 percent to $554 million compared to $604 million for the third quarter of 2000. A decrease in sales volume of 10 percent across all of the glass businesses was offset, in part, by a 2 percent increase resulting from higher selling prices. Operating income for the third quarter of 2001 was $49 million compared to $94 million for the same quarter of 2000. Operating income for the third quarter of 2000 included pretax charges of $7 million for restructuring charges and one-time integration costs related to PPG Auto Glass. Excluding these charges, operating income for the third quarter of 2000 was $101 million. The decrease in operating income is attributable primarily to lower sales volume.
Sales decreased 5 for the first nine months of 2001 to $6.26 billion compared to $6.57 billion for the first nine months of 2000. The combination of a 4 percent volume decline across all business segments and a 2 percent decline from the negative effects of foreign currency translation in the coatings segment contributed to the sales decline. These negative factors were partially offset by a 1 percent increase due to higher selling prices primarily in the glass segment.
The gross profit percentage decreased to 37.3 percent for the first nine months of 2001 compared to 38.4 percent for the first nine months of 2000. The decrease in the gross profit percentage was due to higher energy costs in the glass and chemicals segments.
Net income and earnings per share, diluted, for the first nine months of 2001 were $304 million and $1.80, respectively, compared to $494 million and $2.82, respectively, for the first nine months of 2000. Net income for the first nine months of 2001 included an after-tax charge of $71 million for restructuring and other related activities and net income for the first nine months of 2000 included an after-tax charge of $35 million for the write-off of an equity investment and $3 million of restructuring and one-time integration costs associated with PPG Auto Glass.
Excluding these charges, net income and earnings per share, diluted, for the first nine months of 2001 were $375 million and $2.22, respectively, compared to $532 million and $3.04, respectively, for the first nine months of 2000. The decrease is attributable to higher energy and environmental costs and lower sales volumes, partially offset by slightly higher selling prices and a lower effective tax rate.
Coatings sales decreased 6 percent to $3.34 billion compared to $3.55 billion for the first nine months of 2000. The combination of a decrease in sales volume of 3 percent, primarily in the North American automotive original, refinish and industrial businesses, and a 3 percent decline from the negative effects of foreign currency translation produced the sales decline.
Operating income was $359 million for the first nine months of 2001 compared to $536 million for the first nine months of 2000. Operating income for the first nine months of 2001 included pretax restructuring and other related costs of $83 million, as previously discussed. Excluding these charges, operating income for the first nine months of 2001 was $442 million. The decrease in operating income is attributable to lower sales volumes and higher selling and environmental costs offset, in part, by improved manufacturing efficiencies.
Glass sales decreased 2 percent to $1.75 billion compared to $1.78 billion for the first nine months of 2000. Sales volumes declined 4 percent primarily in our automotive original and fiber glass businesses. This decrease was offset by a 2 percent increase in selling prices primarily in our flat glass and fiber glass businesses. Operating income was $233 million for the first nine months of 2001 compared to $304 million for the first nine months of 2000. Operating income for the first nine months of 2000 included pretax charges of $7 million for restructuring charges and one-time integration costs related to PPG Auto Glass. Excluding these charges, operating income for the first nine months of 2001 was $243 million as compared to $311 for the first nine months of 2000. The decrease in operating income is attributable to lower sales volumes primarily in the automotive original and fiber glass businesses and the effects of higher natural gas costs, partially offset by improved manufacturing efficiencies and higher selling prices.
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