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Letter to the Editor
Monday July 19
PPG's Coatings Segment Spurs Record Q2 Sales and Strong EPS Growth
PPG Industries has reported second quarter net income of $183 million, or $1.06 a share, which includes aftertax charges of $3 million, or 2 cents a share, reflecting the previously announced decision to begin expensing stock options in 2004, and $6 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 reported in May 2002. Sales for the second quarter of 2004 were $2.43 billion, a PPG record for any quarter.That compares with second quarter 2003 net income of $152 million, or 89 cents a share, which includes aftertax charges of $7 million, or 4 cents a share, to reflect the net increase in the value of the company's obligation under the asbestos settlement, and $2 million, or 1 cent a share, related to restructuring. Sales for the quarter were $2.30 billion.
For the first six months of 2004, PPG recorded net income of $298 million, or $1.73 a share, which includes aftertax charges of $7 million, or 4 cents a share, to reflect expensing stock options in 2004, and $9 million, or 5 cents a share, to reflect the increase in the value of the company's obligation under the asbestos settlement. Sales for the first half of 2004 were $4.69 billion.
For the first six months of 2003, PPG recorded net income of $230 million, or $1.35 a share, which includes aftertax charges of $6 million, or 3 cents a share, for the cumulative effect of a required change in the accounting for asset retirement obligations; $10 million, or 6 cents a share, to reflect the net increase in the value of the company's obligation under the asbestos settlement; and $2 million, or 1 cent a share, for restructuring. Sales for the first half of 2003 were $4.38 billion.
"Our strong performance in the quarter reflects the benefits of a growing economy, and more important, the consistent application of strategies that have generated profitable growth in our coatings segment, the continued success of our optical products and our relentless focus on reducing costs," said Raymond W. LeBoeuf, chairman and chief executive officer. "Although we expect the overall economy to continue growing, there will not be consistency across all sectors of the economy. The overall expansion, however, continues."
Coatings sales were $1.35 billion, a PPG record for any quarter, up $105 million, or eight percent. The growth was driven by stronger volumes in the architectural, industrial, automotive OEM, aerospace and automotive refinish businesses and the strengthening of foreign currencies, offset by slightly lower prices in the automotive OEM business.
Operating earnings were $223 million, also a record for any quarter, up $18 million because of increased volumes and improved manufacturing efficiencies, which more than offset additional selling expenses in the architectural business, the impact of cost inflation and lower selling prices.
Glass sales increased $10 million, or two percent, as stronger volumes in the fiber glass, flat glass and automotive OEM businesses more than offset lower selling prices and automotive replacement glass volumes. Operating earnings were up $40 million as improved manufacturing efficiencies, increased volumes and higher other income more than offset lower selling prices and cost inflation.
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