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PPG Profit Tops Estimates as Auto Paint Demand Rises

Thursday, 05 April 2012 04:33 PM

PPG Industries Inc., the world’s second-biggest paint maker, reported first-quarter profit that exceeded analysts’ estimates after seeing increased demand from the aerospace and automotive markets.

Profit was 2 cents to 7 cents a share, Pittsburgh-based PPG said Thursday in a preliminary earnings statement. Excluding costs related to job cuts in Europe and the clean-up of a contaminated New Jersey site, earnings were $1.75 to $1.80 a share, up from $1.40 a year earlier, PPG said. The average estimate of 14 estimates compiled by Bloomberg was $1.44.

Chief Executive Officer and Chairman Charles Bunch said “strong” demand in North America and “solid” conditions in Asia for new-car paint and products used in eye glasses and airplanes more than made up for “muted” European demand. The company plans to eliminate 2,000 employees, mostly at its European coatings business.

PPG rose 2.5 percent to $96.29 at the close in New York.

U.S. house-paint sales benefited from mild winter weather, PPG said. Low domestic natural-gas costs also boosted its results, the company said.

The job cuts and other restructuring activities will cost about $208 million before tax and will save about $140 million a year, including $40 million to $50 million this year, PPG said.

The company added $160 million to reserves for state- mandated remediation in New Jersey and expects to spend $100 million a year on the project for several years.

PPG had $129 million reserved as of Dec. 31 to clean up soil at its former chromium factory in Jersey City, according to a Feb. 16 regulatory filing.

Akzo Nobel NV of the Netherlands is the world’s largest paint maker.

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Thursday, 05 April 2012 04:33 PM
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