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Friday January 17

PPG Profit Up, Helped by Coatings Sales

Chemical and paint maker PPG Industries Inc. has reported a 13 percent rise in profit as higher sales offset pension costs and an asbestos settlement.

A 3 percent rise in coatings revenue was driven by higher paint and sealant demand from customers. The increase, along with rising sales of chemicals and glass, bolstered total revenue to $1.99 billion from $1.91 billion a year ago, PPG said.

The company, which operates plants worldwide, also said sales got a boost from strengthening foreign currencies.

Nonetheless, fourth-quarter earnings reflected lowered expectations, which the maker of auto and aircraft paint announced in November amid a manufacturing slowdown. At the time, PPG said sales and earnings would rise, but less than previously expected.

Pittsburgh-based PPG, which has cut jobs and closed plants during the past year's downturn, reported net income rose of $94 million, or 55 cents a share, up from $83 million, or 49 cents a share, the year-ago period.

Net income would have been 11 cents a share higher if not for ongoing pension and medical costs, the company said. PPG also took a fourth-quarter charge of $4 million, or 2 cents a share, to set aside money for an asbestos settlement.

Excluding the charge, PPG earned 57 cents a share. On that basis Wall Street expected PPG to earn between 55 cents and 60 cents a share. But those estimates had been lowered to reflect the company's scaled back forecast from November.

The company also expects a "challenging" business climate this year but plans to keep reducing debt.

"We expect the global economic environment to be challenging once again in 2003," said Raymond W. LeBoeuf, PPG chairman and chief executive officer. "Nevertheless, we remain committed to further improvements in our cost structure and cash flow. Last year we lowered manufacturing and overhead costs by about $140 million, reduced debt by more than $400 million and increased our dividend payments for the 31st consecutive year. We expect another year of strong cash flow in 2003, which will allow us to reduce debt and increase our financial flexibility."

Meanwhile, chemical sales climbed 13 percent, helped by volume increases and higher prices, which offset rising energy costs. Glass sales increased slightly.

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