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Letter to the Editor
Thursday July 20
PPG Reports Record Sales, Earnings for Any Quarter
PPG Industries has reported record sales and earnings for any quarter with second quarter net income of $280 million, or $1.68 a share. Net income includes aftertax earnings of $12 million, or 7 cents a share, for net legal and insurance matters, and 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 reported in May 2002. That compares with second quarter 2005 net income of $231 million. Sales were $2.82 billion, surpassing the old record of $2.66 billion set in the second quarter of 2005 by 6 percent.For the first six months of 2006, PPG recorded net income of $464 million, or $2.79 a share. Sales for the first half of 2006 were $5.46 billion.
For the first six months of 2005, PPG recorded net income of $326 million, or $1.89 a share. Sales for the first half of 2005 were $5.15 billion.
"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."
Coatings sales increased $129 million, or nine percent, as a result of higher volumes, especially in Asia and Europe; improved selling prices across all businesses; the impact of acquisitions; and the positive impact of stronger foreign currencies. Operating earnings were up $62 million due to the benefits of the higher selling prices and volumes mentioned above and higher other income due to the favorable impact of insurance settlements. These increases were partially offset by the negative impact of inflation, primarily higher raw material costs, and higher overhead expenses, primarily related to growth initiatives in architectural coatings.
Glass sales increased $30 million, or 5 percent, because of higher volumes across most businesses. Operating earnings were down $4 million due to the impact of inflation, lower equity earnings and legal matters. These were substantially offset by lower manufacturing and overhead costs.
Chemical sales increased $9 million, or 1 percent, due to higher selling prices for chlor-alkali products and increased optical sales due to organic growth and acquisitions. These increases were partially offset by lower volumes for chlor-alkali products. Operating earnings were down $15 million due to the impact of higher inflation, higher environmental charges and higher manufacturing costs. These decreases were partially offset by the benefit of the higher selling prices.
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