PPG Undertakes Global Restructuring
Continued slow growth in global demand has prompted US coatings specialist PPG Industries to undertake global restructuring in a bid to save around $125 million a year.
The board of directors has approved “significant and broad” actions to reduce its cost structure across operational, functional and administrative departments. Efforts will be focused on certain (undisclosed) regions and end-use markets where business conditions are weakest, the Pittsburgh-headquartered group said.
Chairman and CEO Michael McGarry said the measures will better align resources with anticipated ongoing business conditions and keep PPG competitive in its end-markets. He added, however, that the company remains committed to continued investment in growth-related initiatives and in geographies with continued growth potential.
PPG will take a pretax restructuring charge of $190-200 million in the fourth quarter of 2016, of which about $140 million represents cash costs and $50-60 million relates to the write-down of certain assets and other non-cash costs. Of the $140 million total cash outlay, about $110 million is expected in 2017 with the balance to occur in 2018. In addition, incremental cash costs amounting to another $15 million is expected during 2017.
Once the actions are completed, the company expects to save between $120 million and $130 million annually. Of this, some $40-50 million should be realized in 2017 with the balance to be achieved by the end of 2018.
PPG has been busy strengthening its European activities, announcing two acquisitions last month. The US company bought the remaining 50% stake in Italian joint venture PPG Univer, just days after agreeing the purchase of leading Romanian paint and architectural coatings manufacturer Deutek.
