PPG Chairman: Company Has Never Been Stronger
PITTSBURGH--April 18, 2002--PPG Industries' quick action to reduce costs and strengthen its balance sheet in 2001 was reflected in its stock price and is recognition that "our company has never been stronger," Chairman and Chief Executive Office Raymond W. LeBoeuf said at the company's annual shareholders meeting today."Last year we easily surpassed our peers in terms of total shareholder return -- whether you compare us to the Standard & Poor's 500, the S&P Chemicals Composite, the S&P Basic Materials Index or our major competitors," LeBoeuf said. "Our focus on costs, as well as our operating discipline, honed during countless economic downcycles throughout our company's 119 years, enabled us to strengthen our balance sheet despite the worst industrial recession in 20 years."
Though net income was down $233 million in 2001, PPG increased its cash flow from operations by nearly $200 million and reduced capital spending by $375 million, enabling the company to reduce debt by about 20 percent. PPG's total debt stands at $2.4 billion, which represents about 44 percent of total capital, down from 50 percent at the end of the first quarter 2001.
While PPG's financial results reflected the challenging economic environment, "We were quite busy in 2001, and I might add, quite successful in accomplishing the things that position us to improve our earnings performance on an ongoing basis and to reach new heights when the economy rebounds," LeBoeuf said.
For example:
| -- | PPG's fiber glass business unit, "embracing our Quality Process with vigor," drove down costs and increased throughput, enabling one facility to still make money while operating at just 30-percent capacity. In the last recession, the break-even operating rates for PPG's fiber glass plants were in the 60-percent range. |
| -- | PPG launched its latest breakthrough glass technology, SunClean self-cleaning glass. |
| -- | Its LYNX Services business processed a record number of auto glass claims and is now entering the vehicular collision damage claims business. |
| -- | In 2001, PPG launched its CertifiedFirst Network of auto body shops and is well on the way of reaching its goal of 1,200 participants this year. |
| -- | The company's Enviro-Prime electrodeposition coatings for automobiles received a 2001 Presidential Green Chemistry Award from the U.S Environmental Protection Agency. |
| -- | For the second consecutive year, PPG was named to the Dow Jones Sustainability World Index, which rates companies around the world on their financial, environmental and social performance. |
"We accomplished so much in 2001 because we at PPG have learned over the years to maintain our focus regardless of economic conditions," LeBoeuf said. "Since 1997, that focus has been trained on increasing earnings growth and improving the cyclical performance of the company. To achieve these objectives, PPG has been pursuing a three-point strategy of building a better business mix, creating breakthrough products and improving our customers' results."
The efforts to build a better business mix over the past five years had a positive impact on PPG's 2001 performance. From 1997 through 1999, PPG invested more than $2 billion on more than 23 acquisitions. During that same period, the company divested two of its most cyclical businesses -- European flat and automotive glass. "As a result (of acquisitions and divestitures), our operating margins in 2001 were significantly better than the recession of 1990-91," LeBoeuf said.
Earlier today PPG announced an $81-million pretax restructuring charge in the first quarter to reduce and restructure its work force further and close facilities or parts of facilities no longer needed as a result of improved business processes.
PPG strengthened both its business mix and balance sheet in 2001, LeBoeuf said, without sacrificing its commitment to customer service and technology. For example, this year Transitions Optical -- PPG's joint venture with Essilor International -- introduced Next Generation Transitions lenses, which are as clear as regular eyeglasses, but outdoors darken as much as necessary, even getting as dark as sunglasses.
Another example of PPG's R&D success is FrameCoat electrodeposition coatings for automotive and light-truck chassis components. Last month the technology received a prestigious PACE Award -- sponsored by Automotive News magazine and Cap Gemini Ernst & Young.
PPG is the only coatings manufacturer to receive the honor three times since the program for automotive supplier innovation began in 1994.
Nearly 40 percent of PPG's sales were generated by products that didn't exist five years ago, LeBoeuf said.
In 2001, PPG's net income was $387 million, or $2.29 a share, including a $101-million pretax restructuring charge in the first quarter. Excluding the charge, equaling 42 cents a share aftertax, income was $458 million, or $2.71. Sales were $8.2 billion.
First quarter 2002 net income reported earlier today were $34 million, or 20 cents a share, including one-time after-tax charges of $55 million, or 33 cents a share, for restructuring and $9 million, or 5 cents a share, for the cumulative effect of a required accounting change. Excluding these charges, net income was $98 million, or 58 cents a share. Sales for the quarter were $1.9 billion.
LeBoeuf recognized the leadership and contributions of Frank Archinaco, executive vice president, who has announced he will retire July 1 after 37 years with PPG. "Frank has established a level of leadership excellence that all of our present and future leaders should strive to emulate," LeBoeuf said.
PPG shareholders elected three incumbent directors to three-year terms: Michele J. Hooper, 50, former president and chief executive officer of Voyager Expanded Learning, Inc.; and Robert Mehrabian, 60, chairman, president and chief executive officer of Teledyne Technologies, Inc.; and LeBoeuf, 55. Terms of PPG's six other directors expire in 2003 or 2004. Retiring after 14 years as a PPG director was David G. Vice, retired vice chairman, products and technology of Northern Telecom Limited.
Shareholders also approved a board proposal to amend and reapprove the PPG Industries, Inc., Stock Plan.
The Pittsburgh-based maker of coatings, glass, fiber glass and chemicals, founded in 1883, has paid dividends to its shareholders without interruption since 1899.
Additional Information
Information on PPG's first quarter 2002 performance, as well as historical performance, is available at Financial on PPG's Web site: www.ppg.com.
Forward-Looking Statement
Statements in this news release relating to matters that are not historical facts are forward-looking statements reflecting the company's current view with respect to future events and financial performance. These matters involve risks and uncertainties that affect the company's operations, as discussed in PPG Industries' Annual Report on Form 10-K filed with the Securities and Exchange Commission. Accordingly, many factors could cause actual results to differ materially from the company's forward-looking statements.
Among these factors are increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, which also depends on economic and political conditions, and foreign exchange rates and fluctuations in those rates. Further, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the company's consolidated financial condition, operations or liquidity.