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UPDATE 3-PPG quarterly profit jumps as economy improves
July 15, 2010 / 12:28 PM / 7 years ago

UPDATE 3-PPG quarterly profit jumps as economy improves

* Q2 adj EPS $1.64 vs Wall Street view $1.43

* Revenue up 11 percent; volume up 10 percent

* Results positive indicator for economy

* PPG reviewing ‘small to mid-size acquisitions’

* CEO sees continued gradual economic recovery (Adds conference call, analyst, stock)

By Ernest Scheyder

NEW YORK, July 15 (Reuters) - Paint, glass and chemicals maker PPG Industries Inc (PPG.N) said on Thursday its second-quarter profit jumped 86 percent, beating analysts’ estimates, as demand increased, especially in emerging markets.

The company supplies a wide range of construction-related industries. Sales at all but one segment increased during the period, a sign the broader American economy continues to right itself after the recession.

On a conference call with investors, executives said they continue to see “solid growth” in the United States and Canada, but that Asia and Latin America are areas were most growth is occurring.

Sales at PPG’s industrial coatings segment, which are used to protect steel, wood, ceramic and other materials on bridges, trucks and other applications, spiked 27 percent as costs fell and volumes rose.

The company also saw strong sales in its optical, commodity chemicals and glass segments, all due to improving volumes. The company’s optical unit makes the popular Transitions lenses for eyeglasses.

Sales at the company’s architectural coatings division for Europe, the Middle East and Africa fell 5 percent, partly due to a strengthening dollar.

“Our global portfolio and our efforts to restructure our businesses to reduce structural costs have positioned PPG to capitalize on what we anticipate to be a continued, gradual, global economic recovery,” Chief Executive Officer Charles Bunch said.

PPG said it would continue to use excess cash this year for share repurchases, a strong sign executives are confident in the company’s financial health.

BY THE NUMBERS

The Pittsburgh-based company posted net income of $272 million, or $1.63 per share, compared with $146 million, or 89 cents per share, a year earlier.

Excluding a charge for an asbestos-related settlement, the company earned $1.64 per share. By that measure, analysts had expected $1.43, according to Thomson Reuters I/B/E/S.

About 7 cents of the earnings per share came from a lower-than-expected tax rate of 28 percent.

Sales rose 11 percent to $3.49 billion, missing analysts’ estimates of $3.52 billion.

Volume rose 10 percent. Demand for some products was weak in North America and Europe, but strong in Asia and Latin America, the company said.

PPG also said it was considering several “small to mid-size” acquisitions in the $20 million to $250 million range, and that it had repurchased 1.6 million shares during the quarter.

Shares were up 9 cents at $64.61 in afternoon trading. The stock has traded between $44.77 and $72.24 in the past 52 weeks. (Reporting by Ernest Scheyder, editing by Gerald E. McCormick, Lisa Von Ahn and Bernard Orr)

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