PPG recently announced that two separate and independent reviews of its business portfolio were completed by Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC, with each firm independently conducting multi-faceted evaluations of PPG’s business portfolio, including potential separation opportunities. PPG’s board of directors and executive management team recently received a full report from each advisor with respect to their independent reviews. Based on these reports and its own evaluation, the board has determined that maintaining the company’s current business portfolio composition, including its architectural and industrial coatings businesses, provides the best opportunity to maximize long-term shareholder value.

“PPG’s Board of Directors commissioned a strategic review process by two independent advisors, with a focus on long-term shareholder value, along with the guidance of ‘nothing is sacred,’” said Hugh Grant, PPG’s lead independent director. “The independent findings made clear, and after its own review of these findings the Board concluded that, the current business portfolio provides the best opportunity to drive long-term shareholder value. The Board and management team remain strongly aligned and accountable for delivering on the company’s current year commitments and future growth potential.”

“The two independent advisors performed thorough reviews and their similar conclusions clearly indicate the value of maintaining our current business portfolio, including architectural and industrial coatings, as the best strategic path to maximize shareholder value. By maintaining our current portfolio, we avoid negative commercial, operational and procurement impacts and preserve full strategic flexibility for the future,” said Michael H. McGarry, PPG chairman and CEO. “As we have done consistently, we will continue our ongoing strategic assessment of all our businesses, ensuring each business continually earns its place in our portfolio based on current performance and future expectations.

“In addition, we recently concluded an engagement by a globally-recognized consulting firm focused on operational and growth investment reviews for our U.S. and Canada architectural coatings business, targeting full and rapid earnings recovery following the prior year customer assortment changes. Recommendations from this engagement include driving certain commercial network optimizations, implementing further cost structure improvements, utilizing additional sales effectiveness tools and adopting new digital technologies. We are executing these initiatives with the goals of achieving full recovery of our profitability next quarter and positioning the business for continued success.

“Also, while we remain a top quartile performer in our overhead and corporate cost structures, we conducted a rigorous internal operational and organizational review and identified certain opportunities for the company to further improve operating efficiency and maintain commercial excellence,” McGarry said. “As a result, we are working to finalize a new cost savings program with targeted full year run rate savings of about $125 million. We expect to provide additional detail with the release of our second quarter financial results; however, the final program is expected to include:

  • Further manufacturing optimization
  • Targeted pruning of low profit business in certain regions
  • Exiting certain smaller product lines that are not meeting profitability objectives
  • Reorganization of certain business unit cost structures based on current economic climate
  • Certain redundancy actions related to recent acquisitions
  • Second quarter charge in the range of $185 to $200 million, excluding certain non-cash items

“Finally, I would like to thank our shareholders for their continued feedback and support. I remain confident that we are well positioned strategically and that we are taking the appropriate long-term actions to drive operational excellence and increase shareholder value.”

For more information, visit www.ppg.com.