PPG shares soar on restructuring moves, outlook
PITTSBURGH—PPG Industries Inc. on Thursday raised its first-quarter guidance and said it will reduce costs by cutting 2,000 jobs, mostly in Europe.
Shares were up $4.10, or 4.4 percent, to $98.02 in morning trading. Early in the session, they hit an all-time high of $98.43.
The company, which makes coatings and sealants for cars and industrial uses, said in a press release that restructuring actions would "impact about 2,000 employees," mostly in its global architectural-coatings business and other operations in Europe.
"These cost-reduction actions, while always difficult decisions, are needed to ensure that our cost structure is appropriate for business conditions and that all of our operations remain competitive globally," CEO Charles E. Bunch said in a statement.
Company spokesman Jeremy Neuhart said the 2,000 jobs would be cut by a combination of "eliminations, layoffs, not replacing vacancies." He said while most will be in Europe, some would be in the U.S. He declined to give a breakdown.
Neuhart said the company was in the process of notifying affected employees of the job cuts.
PPG said the restructuring moves will eventually save $40 million to $50 million this year and cut annual costs by $140 million.
The company expects to take first-quarter charges after taxes of $164 million, or $1.06 per share, for restructuring, and $100 million, or 64 cents per share, for environmental cleanup at an old plant in Jersey City, N.J.
Excluding special items, PPG said it will report adjusted profit of between $1.75 and $1.80 per share.
Analysts, who usually exclude those items, expected $1.44 per share, according to FactSet.
PPG earned $1.40 per share in the same period last year, when there were no charges.
The company said the pace of business grew from the fourth quarter of 2011 into the first quarter of this year, helped by modest restocking by customers. Strong end-markets included aerospace and auto manufacturing. The company said sales of paint in the U.S. were helped by "early signs of a construction recovery" and mild winter weather.