PPG Q1 drops on SigmaKalon acquistion costs

17 April 2008 15:34  [Source: ICIS news]

TORONTO (ICIS news)--PPG Industries posted a 48% drop in first-quarter net income due to acquisition costs related to its $2.2bn (€1.4bn) purchase of SigmaKalon, the US coatings, chemicals and glass producer said on Thursday.

 

Net income for the three months ended 31 March was $100m, down from $194m in the 2007 first quarter, on sales of $3.7bn, up 41%.

 

PPG’s performance coatings segment sales increased $259m, or 30%, to $1.1bn in the first quarter, due to the SigmaKalon and another acquisition. 

 

Segment income was down marginally to $120m, from $121m in the 2007 first quarter, as price gains were offset by higher raw material, transportation and other costs.

 

PPG’s industrial coatings segment sales for the quarter increased $189m, or 22%, to $1.06bn, as a result of the SigmaKalon acquisition, stronger foreign currencies and improved volumes in all businesses.

 

That segment’s volume declines in North America were more than offset by improved volumes in all other regions, the company added. Segment income was flat at $95m.

 

PPG’s newly formed architectural coatings EMEA (Europe, Middle East and Africa) had sales of $536m and income of $9m. That segment comprises about 70% of acquired SigmaKalon sales, PPG said.

 

Commodity chemicals segment sales for the quarter increased $52m, or 14%, to $423m, due primarily to increased selling prices.

 

Chemical segment earnings improved by $24m, to $68m, as higher selling prices and lower manufacturing costs more than offset the impact of inflation, PPG said.

 

"We are very pleased to have delivered solid organic growth despite a slowdown in the overall US economy," said CEO Charles Bunch.

 

"Looking ahead, while we will likely continue to experience a difficult North American economy, we remain confident in our ability to grow both sales and earnings.”

 

PPG had diversified out of North America, with the US and Canada now accounting for about 45% of its overall sales, Bunch said.

 

PPG's share price was down 0.70%, to $65.46, in early morning trading in New York.

 

($1 = €0.63)

By: Stefan Baumgarten
+1 713 525 2653

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