PPG axes 1,700 jobs as part of global restructuring
PPG Industries Inc. is cutting 1,700 jobs, or 4 percent of its global workforce, as the world’s largest paint and coatings company tries to reduce costs after a series of recent acquisitions.
The layoffs included 40 workers in Pittsburgh and are part of a restructuring that includes reducing production capacity. Some of the jobs were administrative positions meant to reduce redundancies, the Downtown-based company said. PPG employs 2,500 in Pittsburgh.
PPG is aiming to achieve $100 million to $105 million in annual pretax savings by 2017. It declined to provide further details, including other types of jobs that will be affected and when the layoffs will happen beyond saying the restructuring will be completed in 2016.
“We remain focused on aggressively managing our costs and are initiating restructuring actions concentrated on securing the synergies we committed to with our recent acquisitions,” CEO Charles Bunch said.
PPG spent more than $2.4 billion buying companies last year, part of a long-term strategy to grow through acquisitions. It bought Mexico City-based Consorcio Comex for $2.3 billion and made a handful of smaller deals, including for two paint store chains in Western Pennsylvania, Westmoreland Supply Co. in Greensburg and Masterwork Paint Co. in East Liberty.
The company announced the restructuring with its first-quarter financial results. It posted a profit of $322 million, or $2.34 a share, in the January-March quarter, down from $1.3 billion, or $9.07 a share, a year earlier. The year-ago period included a one-time gain of more than $1 billion related to the sale of PPG’s Transitions Optical business.
On an adjusted basis, PPG earned $327 million, or $2.37 a share, up from $279 million, or $1.98 a share. The increase was driven by acquisitions, the company said. Analysts had predicted adjusted net income of $2.35 a share.
Revenue in the quarter was $3.66 billion, up 1 percent from $3.64 billion a year earlier.
The company’s stock closed Thursday at $226.75, down 52 cents, or 0.23 percent.
Ghansham Panjabi, an analyst with Robert W. Baird in Dallas, said PPG’s earnings report was “very positive,” and he suspected the stock closed down because investors may be cashing in on its run up in value. Since hitting a 52-week low of $171.56, PPG shares have climbed 32 percent.
Panjabi said he was encouraged by Bunch’s optimistic outlook for growth.
Bunch told analysts: “Looking ahead, we anticipate stronger global economic growth in the coming quarters, including a resumption of growth in Europe and a return to a higher growth rate in the U.S.”
Despite the need to “aggressively manage costs” related to acquisitions, Bunch told analysts on a conference call that PPG was continuing to look for companies to buy. He said the company expects to close a deal to buy Le Joint Francais, a French supplier of sealants and adhesives to the aerospace and automotive industries, before the end of the year.
“We don’t have any mega-deals out there — those don’t come along that often,” Bunch said. “We have some other deals we are currently discussing and hope to announce soon.”
PPG held its annual shareholder meeting Thursday, at the Fairmont Hotel, Downtown, and announced a 2-for-1 stock split, which was applauded by some shareholders in attendance. The split will take effect on June 12. Companies split their stock to make it more affordable.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or [email protected].