From aftermarketNews Staff & Wire Reports
PITTSBURGH — PPG Industries has announced a restructuring plan that is expected to result in approximately $100 million in pretax annual cost savings for the company. The restructuring initiative is part of PPG’s global transformation in conjunction with its acquisition of SigmaKalon, completed Jan. 2. The company stated its intent to pursue restructuring actions in its latest 10-Q filing with the U.S. Securities and Exchange Commission. As part of the initiative, several PPG manufacturing units and facilities in the United States, Canada and Europe will be impacted.
“The actions we are taking will streamline our worldwide manufacturing footprint and staffing levels following our recent acquisitions, the most notable of which is SigmaKalon,” said Charles Bunch, PPG chairman and chief executive officer. “Elements of this initiative are part of our plan to achieve the cost synergies we set in acquiring SigmaKalon. We will also adjust our cost structure and better align it with geographic changes in our customer base, enabling us to maintain our competitive strengths in the end markets in which we participate.”
As part of the restructuring, PPG will close several coatings manufacturing facilities, including those in Clarkson, Ont., Canada, and Geldermalsen, Netherlands, which are anticipated to close in the second and third quarters 2009, respectively. The Geldermalsen closure will be implemented following consultation with the applicable works council. Other staffing reductions will occur in PPG’s coatings businesses in North America and Europe.
PPG also will close its Owen Sound, Ont., Canada, glass manufacturing facility in early 2009, and will idle one float glass production line at its Mt. Zion, Ill., facility in the second quarter next year. Other actions will include writing off idle production assets in PPG’s fiber glass and chemicals businesses.
A pretax charge of approximately $160 million, or 65 cents per share, will be recorded in the company’s third quarter 2008 financial results. In addition, actions related to the integration of the SigmaKalon businesses have a cost of approximately $25 million and will result in an increase in goodwill. The combination of these actions is expected to result in pretax cost savings at an annual run-rate of about $100 million by the end of 2009. The cash outlay for these actions is expected to total approximately $100 million.
Bunch said PPG continues to evaluate opportunities to strengthen its global businesses, which may result in additional restructuring actions and related cost savings in 2009.
The company also will incur additional expenses of approximately $15 million directly associated with the restructuring actions but, based on U. S. Generally Accepted Accounting Principles, PPG said it expects these costs will be charged to expense as incurred and therefore are not part of a restructuring reserve. The company expects to incur these additional, related expenses in the second half of 2009.
For more information about PPG, visit: www.ppg.com.
