(Edited from 'Outlook')
PPG delivered a strong performance in 2007, with sales of around $11bn. Looking to the future, PPG believes that its continued ability to meet the challenges facing its company relies on successfully accelerating the growth of its sales and earnings, and strengthening its businesses through leadership and innovation.
It says that it is committed to leading in the markets and technologies in which it competes, with an emphasis on providing ‘innovative products and services’. It further believes that this combination of growth, leadership and innovation creates an environment that fosters overall growth.
PPG expects that energy and raw material costs will continue to challenge the company. So will ‘demanding conditions’ in some of the markets that PPG serve. As a result, it will supplement ongoing initiatives to reduce manufacturing and overhead costs through continuous improvement with additional actions, such as the restructuring plans it is finalising.
However, it believes that it is ‘well-positioned for both organic growth and acquisitions’, taking advantage of its strong balance sheet and cash flow. ‘With a focus on growth, leadership, and innovation, I am confident that our company has the ability to continue reaching new heights’, says chairman and chief executive officer, Charles Bunch.
Leadership is an important component of PPG’s strategy for accelerating growth and strengthening its businesses, whether it’s building a presence that enables the company to participate fully in key markets or investing in the manufacturing technologies that meet the demands of the marketplace. The Asian coatings market is an example. Since 1999, PPG’s coatings sales in the region have more than doubled, growing at a rate of 18%/year.
Strengthening its business in 2007 will remain a key focus point with PPG claiming to be a ‘significant player’ in key markets. As a result, PPG is adding coating capabilities at its Wichita Falls, Texas, US, performance glazing plant to meet the growing demand for low-emissive glass and to accommodate future generations of energy-efficient, high-performance products.
Another example of PPG’s investment in technology to maintain the strength of its businesses is the announcement that the company will install membrane cell technology for the manufacture of chlor-alkali products at its Lake Charles, Los Angeles, US, chemicals complex. Installation of the membrane cells, which is expected to be completed by mid-2007, will eliminate the use of mercury at Lake Charles while reducing energy use by around 25% over mercury cells. In addition, the new technology will reduce maintenance and operating costs, enhancing the sustainability and competitiveness of PPG’s largest chemicals facility.
PPG claims that it is a ‘leader in the field of nanotechnology’. It has developed two products based on nanotechnology, CeramiClear clearcoat for automobiles and SunClean self-cleaning glass. Furthermore, PPG is working with the US departments of Energy and Defence to develop a low-cost process for producing nanoparticles that could be used in a wide range of applications, such as stronger, lightweight body armour for soldiers, and brighter colours and enhanced corrosion and scratch resistance for paints.
Outlook
Worldwide economic growth is expected to continue in 2007, with all four of the major economies expanding. The Western European economy began to show some positive signs at the end of 2006 that will likely carry forward into early 2007, at low, but positive levels. Growth in Eastern Europe is expected to continue. In Japan, several economic indicators show that the economic environment has rebounded into positive territory for the first time in several years. Meanwhile, the emerging Asian economies are expected to continue to post high growth rates, especially in both China and India.
China’s infrastructure growth is expected to continue to impact the overall global economy via increased demand for basic goods and commodities. Additionally, China and other low production cost countries will continue to put downward pressure on worldwide pricing of consumer goods. As has been PPG’s experience over the past few years, it expects China’s expansion to benefit demand for its coatings, fibre glass and optical businesses, while requiring its glass and commodity chemicals businesses to continue its ongoing focus on reducing costs.
It will continue its commitment to introducing ‘new technologies and achieving operational excellence’ through its continuing focus on reducing costs. The outlook for the global economic environment should support its efforts to deliver sales growth in 2007 throughout its businesses. PPG also expects to face continued cost pressures in 2007 from pensions, healthcare, natural gas and raw materials.
The cost pressures that it faces in 2007 means that PPG will supplement its ongoing initiatives to lower its manufacturing and overhead costs through continuous improvements with additional actions to reduce its work force and consolidate facilities. However, PPG remains confident that it is well positioned to benefit from the expected worldwide economic growth in 2007.
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Financial highlights: PPG, year ended 31 December
|
|
2008 |
2007 |
2006 |
2005 |
2004 |
|
Sales ($ m) |
15,849 |
12,220 |
9,861 |
9,028 |
8,325 |
|
Net Profit ($ m) |
538 |
834 |
711 |
596 |
683 |
|
Total Assets ($ m) |
14,698 |
12,629 |
10,067 |
8,681 |
8,932 |
|
Diluted earnings per share ($) |
3.27 |
5.07 |
4.29 |
3.51 |
3.98 |
|
Number of Employees |
44,900 |
34,900 |
32,200 |
30,800 |
31,800 |
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PPG Industries
Company Structure
PPG Industries is a global supplier of coatings, continuous-strand fibreglass, flat and fabricated glass and chemicals. PPG claims to be the world's largest producer of transportation coatings and a leading maker of industrial and packaging coatings, aircraft transparencies, flat and fabricated glass, continuous-strand fibre glass, chloralkali and specialty chemicals, and architectural coatings. The company was founded in 1883.
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