PPG Industries Inc. reported fourth-quarter 2009 net income of $142 million, a 50% increase from $71 million for the fourth quarter of 2008. Sales for the quarter, however, declined 2%, to $3.1 billion. For 2009 as a whole, net income was $336 million, a 48% decline from 2008 net income of $538 million. Sales for the year fell 23%, to $12.2 billion, from $15.8 billion in 2008.
The company said the improved earnings for the fourth quarter reflected gradual improvement in demand and cost reductions due to restructuring and cost-cutting actions. Fourth-quarter net income included an after-tax charge of $2 million, reflecting the net increase in the current value of the company’s obligation under its proposed asbestos settlement, which is pending court action. Fourth-quarter 2008 net income included after-tax earnings of $3million related to the proposed asbestos settlement.
Charles E. Bunch, chairman and CEO, said the fourth-quarter results reflected the company’s “aggressive restructuring and cost-reduction actions,” and signaled marked improvement from a “challenging year” as a whole. “The global recession was both steep and broad, and it adversely affected many of our end-use markets,” he said. ”PPG reacted decisively by implementing aggressive restructuring and cost-reduction actions.”
Bunch said that while earnings still have not fully recovered, the company’s completion of restructuring actions ahead of schedule led to improved results in 2009 and “will do so to a greater degree in 2010.” He cited as an example the earnings gain of $129 million for the company’s Industrial Coatings Segment in the fourth quarter, compared to the same period in 2008. He also said PPG “delivered strong and near-record cash from operations in 2009,” due to strategic direction and “actions we have taken over the past few years to transform the company.” He added that PPG paid down about $675 million of debt in 2009 and again raised its annual dividend payout.
Segment results for coatings businesses
Fourth-quarter sales for the company’s Performance Coatings Segment declined 7%, to $1.026 billion, in the fourth quarter from the fourth quarter of 2008, due to low volumes in all businesses and regions. The segment’s earnings rose 4%, to $149 million, as a result of improved selling prices and reduced costs. For 2009 as a whole, sales for the segment declined 13%, to $4.095 billion, from 2008, while earnings declined 5%, to $551 million.
Sales for the Industrial Coatings segment rose 12%, to $859 million, from the fourth quarter of 2008 due in part to stronger sales volumes in automotive OEM coatings and improving global industrial demand. The segment’s earnings were $89 million, a gain of $129 million from the $40 million net loss for the fourth quarter of 2008. For 2009 as a whole, sales for the segment declined 23%, to $3.068 billion, from 2008. Earnings for the segment fell 25%, to $212 million.
Sales for the Architectural Coatings—Europe, Middle East and Africa (EMEA) segment rose 10%, to $457 milllion, while earnings posted a gain of $11 million from the year before, when the segment broke even. For 2009 as a whole, the segment’s sales declined 13%, to $1.952 billion, while earnings fell 9%, to $128 million.
Commenting on the outlook for 2010, Bunch said the company is “guardedly optimistic,” noting that “while recovery in the global economy remains gradual, PPG is well positioned in several ways. Our strong and growing presence in Asia will continue to yield benefits based on economic growth in the region. We will also realize an incremental $100 million of savings from our completed restructuring actions that will enable us to fully leverage anticipated higher full year global activity levels. And we have a strong cash position of just over $1 billion to support earnings growth opportunities.”