First quarter net income was $194 million, or $1.17 per share. Net income includes an aftertax charge of $5 million, or 3 cents a share, to reflect the net increase in the current value of the company’s obligation under its proposed asbestos settlement agreement reported in May 2002, which is subject to pending court proceedings.
In the first quarter 2006, PPG reported net income of $184 million, or $1.11 a share, including aftertax charges of $23 million, or 14 cents a share, for business restructuring, and $6 million, or 3 cents a share, to reflect the net increase in the value of the company’s obligation under its asbestos settlement agreement. Sales were $2.6 billion.
“We are beginning to realize the financial benefits of the acquisitions we made last year. Combined with strong organic growth, they enabled our Optical and Specialty Materials segment and our two coatings segments to achieve aggregate sales growth of about 20 percent and to improve their operating earnings by 12 percent,” said Charles E. Bunch, PPG’s chairman and chief executive officer. “Meanwhile, our Commodity Chemicals segment was down year-over-year but rebounded versus the fourth quarter, and the second quarter outlook is more positive.
“Our global presence has and will continue to help us benefit from worldwide economic growth in many of the markets we serve. In addition, we continue to evaluate appropriate acquisition opportunities and to explore alternatives for our underperforming businesses. Our ultimate goal remains maximizing shareholder value.”
PPG’s financial results are now reported in five business segments, rather than its historical three, to improve clarity about the company’s performance.
Performance and Applied Coatings sales for the quarter increased $177 million, or 26 percent, as a result of increased sales from acquisitions and the positive impact of stronger foreign currencies, improved volumes and selling prices. Segment earnings grew by $16 million as a result of higher sales volumes and the positive impact of acquisitions.
Industrial Coatings sales for the quarter increased $101 million, or 13 percent, as a result of increased sales from acquisitions, the positive impact of stronger foreign currencies, and improved volumes. Segment earnings improved $4 million due to the benefits of higher sales volumes and the impact of acquisitions. The earnings impact was partially offset by the negative impact of inflation.
Optical and Specialty Materials sales for the quarter increased $48 million, or 21 percent, also due to improved volumes and increased sales from acquisitions. Segment earnings were up $11 million due to the impact of higher sales volumes. Segment earnings were partially offset by increased advertising expenses to support growth.
Commodity Chemicals sales for the quarter decreased $30 million, or 7 percent, due to lower selling prices. Segment earnings were down $43 million primarily due to lower pricing, which was partially offset by lower energy costs, primarily natural gas.
Glass sales decreased $17 million, or 3 percent, due to lower volumes and selling prices, offset by stronger foreign currencies. Segment earnings were down $15 million due to lower pricing and the impact of writing off PPG’s investment in a Venezuelan joint venture.