Profitable Growth is PPG's Primary Mission, Chairman Says

NEW YORK--Nov. 8, 2005--PPG Industries' Chairman and Chief Executive Officer Charles E. Bunch told analysts and investors today that the nearly $1 billion in cash from operations the company has generated on an annual basis is "being put to work, helping us to generate profitable growth, which is our company's primary mission."

Last month PPG reported record third-quarter sales, marking the 10th consecutive quarter of year-over-year sales records. Bunch said aerospace products, architectural coatings, optical products and Asia coatings are generating strong sales growth, with volume increases in these businesses contributing nearly $600 million in sales, or about 6 percent, since 2003.

Just as important, the four businesses are key drivers of earnings growth, Bunch said at a meeting conducted here by the company.

PPG's aerospace business has logged double-digit volume gains the past six quarters. Architectural coatings has doubled the size of its company-owned store network since 1999 to more than 330 stores, adding 50 stores in the past 12 months.

Meanwhile, optical products has grown sales at a compound rate of 17 percent per year since 2002. And PPG's coatings sales in Asia now account for nearly 10 percent of the company's total coatings sales, with margins comparable to those for PPG's entire coatings segment.

PPG generated about $5 billion in cash from operations from 2000 to 2004, spending approximately $1.5 billion during that period to retire debt. As a result, PPG's debt-to-total-capital ratio is approximately 27 percent.

"We have only a few minor debt payments due over the next 10 years," said William Hernandez, PPG senior vice president, finance. "Therefore, we have considerable financial flexibility for the next decade to use our cash to create shareholder value."

Bunch praised the company's Lake Charles, La., workers for their efforts in restoring PPG's largest chemicals facility, which was struck by Hurricane Rita in late September.

Yesterday the company announced the Lake Charles complex is now operating at 80 percent of capacity, with a current estimate of restoring the remaining 20 percent in the next few weeks.

Bunch repeated that the company expects hurricanes Katrina and Rita to have at least the same earnings impact on fourth-quarter results as they did in the third quarter, excluding higher natural gas prices. Last month the company reported the hurricanes had a negative impact of approximately $30 million pretax on earnings for the July-through-September period.

"Now following the hurricanes, we are being challenged once again by another round of input cost increases, primarily in the natural gas arena," Bunch said. "And we are working diligently, once again, to preserve our margins."

Bunch said he believes the company is up to the challenge. "We are proud that we have continued concurrently to generate excellent earnings and also grow the top line," Bunch said. "Furthermore, we expect continued sales and cash-generation growth going forward, with aerospace, architectural coatings, optical products and Asian coatings leading the way."

Pittsburgh-based PPG Industries is a global supplier of coatings, glass, fiber glass and chemicals, with 108 manufacturing facilities and equity affiliates in more than 20 countries. Sales in 2004 were US$9.5 billion.

Forward-Looking Statement