Reports First-Quarter Loss of $111 Million
In its first-quarter statement released today, PPG reported that its glass segment net sales were $196 million compared to $536 million in last year's first quarter. Segment income for the quarter was at a loss of $27 million, compared to a profit of $30 million last year. PPG says both glass segment net sales and income include the results of the divested automotive glass and services business for the first three months ended March 31, 2008. First quarter 2008 results for the divested automotive glass and services business were earnings of $11 million pretax, $7 million after-tax, or 4 cents per share.
Overall, PPG reported that sales for the first quarter dropped 30 percent to $2.8 billion compared to last year's first quarter. The company reported a loss of $111 million, or 68 cents per share, which included a significant restructuring charge. Adjusted net income was $32 million, or 19 cents per share. First quarter 2008 sales were $4 billion and reported net income was $100 million, or 61 cents per share; adjusted net income was $189 million, or $1.15 per share.
First quarter 2009 net loss includes after-tax charges of $141 million, or 86 cents per share, for business restructuring and $2 million, or 1 cent per share, to reflect the net increase in the current value of the company's obligation under its proposed asbestos settlement, which is pending court proceedings. First quarter 2008 net income included non-recurring acquisition-related costs of $89 million after-tax, or 54 cents per share, stemming from the January 2008 acquisition of SigmaKalon.
"Our first quarter results reflect continued deterioration in the global economy, resulting in lower demand in many of the end-use markets we serve," said Charles E. Bunch, PPG chairman and chief executive officer. "The most significant drop-offs occurred in global automotive OEM and in many industrial markets. We quickly implemented broad actions, including business restructurings and general spending controls which were successful in offsetting some of the earnings impact from the lower demand levels."
Bunch added that the company anticipates "some seasonal demand growth in the second quarter, but expects activity levels to remain low in comparison with recent years Also, we remain focused on prudently managing our cash and we ended the quarter with about $530 million of cash on hand, which is up several hundred million dollars from our 2007 and 2008 first quarter levels."
The first quarter 2009 charge of 86 cents per share relates to a business restructuring plan announced by the company last month that is expected to deliver pretax cost savings of approximately $60 million in 2009, growing to an annual run rate of about $140 million thereafter. The plan includes the closure of a paint manufacturing operation at the company's Saultain, France, plant; several smaller production, laboratory, warehouse and distribution facilities across PPG's businesses and regions; and a broad reduction in employment across the company globally. Last September, PPG announced another restructuring plan expected to result in pretax cost savings at an annual run-rate of about $100 million by the end of 2009.
Sales in the quarter were down $1.2 billion, including a $242 million
impact from the divestiture of the automotive glass and services business.
The remaining sales decline occurred in all regions of the world, led
by declines exceeding 30 percent in Europe, the Middle East and Africa,
and 20 percent in the United States; Asia Pacific sales were down high-teen
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