PPG Industries officials were optimistic about the future of the flat glass industry during a discussion of the company’s fourth-quarter 2012 results held this morning, despite a 6 percent drop in sales for the first quarter.
“We think we have begun to see improvement in the flat glass business tide, more specifically for end use market in the commercial construction industry in North America,” said PPG chair and CEO Charles Bunch in response to an investor question about the future of the business. “We’re seeing some of the early signs of improvement. We have what we think is a good position in that business as well as market position, so we think that there’s an opportunity for improvement in that business.”
Bunch noted that there are still challenges outside the North American market.
“We have had some challenges tied to some global weakness in the business in Europe. We are tied in Asia as well to the electronics industry, which has been weaker,” he said. “Right now we think we’re focused on the right things in the business which are continuing to improve our operations and if opportunities present themselves as we move forward we’ll continue to look at them.”
For the fourth quarter, the company reported a 5.9 percent drop in its glass segment sales, with a total of $241 million in sales reported for the quarter, down $15 million from the prior year. Flat glass sales were up, according to the report, but lower fiberglass volumes and pricing led to the decline.
Glass segment earnings for the quarter were $8 million, down $11 million from the prior-year quarter, “as lower fiber glass sales and equity earnings offset strong manufacturing cost improvements.”
Overall, PPG reported net sales of $3.6 billion for the quarter. Net income for the quarter was $227 million.
The company’s annual sales for 2012 were $15.2 billion, an increase of 2 percent versus 2011 sales of $14.9 billion. The company’s full year 2012 net income was $941 million, which includes after-tax charges of $11 million for acquisition-related costs and costs directly related to the separation of the commodity chemicals business and merger with a subsidiary of Georgia Gulf Corp. The company anticipates additional acquisition- and separation-related costs in the first quarter 2013.
“Our record fourth-quarter results capped off an exceptional year for the company, driven by excellent operating performance and several significant strategic actions that have accelerated the pace of our portfolio transformation,” said Bunch. “During the quarter, as we did during the first nine months, we grew our sales and earnings despite moderate overall economic conditions that varied by region and end-use market, and continued negative impacts from currency translation.”
Looking ahead, Bunch said he anticipates economic trends will remain varied by region in 2013, with growth in North America, improving growth prospects in Asia and subdued activity levels in Europe. “We will continue to aggressively manage our businesses, including delivering incremental 2013 savings of between $70 million and $80 million from our previously announced restructuring program and targeted price increases in our coatings businesses, as we work to fully recapture inflation from the past two years,” he said.
