PPG Industries Inc. (PPG) will lay off another 2,500 employees,
or 5.6% of its work force, and cut compensation as the paint, glass
and chemical maker continues to tighten its belt to fight dwindling
demand and earnings.
The company also said it would close more factories as it
projected first-quarter results below analysts' expectations.
Shares of PPG were up 2.7% at $33.81 in recent trading. The
stock remains off more than half from its 52-week high in
September.
"These are sweeping steps that will impact all of PPG's business
segments and regions," said Chief Executive Charles E. Bunch,
adding that the largest portion of the cuts will take place in the
company's automotive industrial coatings units, which have been
particularly hard hit by severe declines in global demand.
The company now expects first-quarter earnings of 10 cents to 15
cents a share. Analysts expected 27 cents a share, according to
Thomson Reuters.
PPG has continued to struggle as automotive and other industrial
customers cut production and take longer to replenish inventories
amid weak consumer demand and tight credit markets. Analysts have
been concerned that PPG's exposures to the commercial construction
market and the weak European housing market could pressure
results.
PPG first started restructuring its business last September,
closing several factories and idling others to save $100 million by
the end of 2009. The company considered another round of moves as
recently as the fourth quarter.
PPG, expecting to incur $190 million, or 88 cents a share, in
first-quarter charges, will layoff about 2,500 employees globally
and implement employee furloughs and other compensation measures.
The company also will close a French paint-manufacturing plant and
other smaller operations.
PPG said there is a possibility of recording another $50 million
in fees later in the year after other plant closures are
finalized.
The new plan is expected to save about $60 million in 2009 and
grow to an annual rate of about $140 million thereafter.
PPG earlier this month was downgraded to below-average credit
quality by Standard & Poor's Ratings Service on concerns over
continued earnings and volume slumps.
-By Katherine E. Wegert, Dow Jones Newswires; 201-938-5294;
katherine.wegert@dowjones.com