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PPG Industries have reported second quarter net income of $231 million, with sales of $2.66 billion, a record for any quarter.
The results compare with the second quarter 2004 net income of $187 million and sales for the second quarter of 2004 were $2.43 billion.
“”We not only generated record sales for any quarter, we also enjoyed one of our best quarterly earnings performances ever,”” said Charles E. Bunch, chairman and chief executive officer. “”In addition, we made progress in restoring our coatings margins and expect this improvement to accelerate the remainder of the year.
“”While the global economy shows signs of moderating, we see continued strength in our coatings and chemicals segments, which achieved record sales each of the past two quarters. This measurable proof validates our earnings growth strategies and positions PPG to continue generating shareholder returns.””
Coatings sales increased $96 million, or 7 percent, as a result of improved selling prices across all businesses except automotive, the impact of foreign currencies and higher volumes in architectural, aerospace and automotive. Glass sales decreased $3 million, or 1 percent, as lower selling prices and lower volumes across all businesses except automotive replacement glass exceeded the impact of foreign currencies. Despite improved manufacturing efficiencies, operating earnings were down $18 million as a result of inflation, including higher energy costs; lower selling prices; and lower other income.
Chemicals sales increased $134 million, or 27 percent, on higher selling prices for chlor-alkali products, higher volumes in optical and the impact of foreign currencies. Operating earnings were up $102 million primarily due to higher selling prices and improved volumes. These increases exceeded the impact of higher energy and other inflation costs and higher overhead expenses, related primarily to optical advertising.
Reports have suggested that PPG’s Lexington plant in the US, responsible for the production of fibreglass yarn, is shutting down one of three furnaces in an effort to reduce some of the plant’s capacity.
“”Our sales have been down a little bit,”” Brian McIlwain, the company’s human-resources manager, said. “”As a result, our inventory has risen, and we need to bring that back down, so we’re being forced to reduce some of our capacity.”” Mcllwain added that the reasons behind the downturn is due to the availability of cheaper fibreglass in Asia.
John Gray, Lexington’s city manager, said, “”It’s all a part of global competition that most of the industries face. There are changes being brought all across America. I’m sure they’re continuing to try to find ways to become more efficient and remain competitive.””
As a result of the drop in sales, the company are expected to let go around 25-30 of their staff from the plant that employs around 650 employees.
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