Coatings maker PPG on Friday said it is reviewing cost-cutting moves after the Pittsburgh company disclosed it will post a third-quarter loss because of slow sales in Europe and charges that stem from transferring $1.6 billion in pension obligations to insurance companies.
The Downtown-based company expects the loss to be 74 to 77 cents per share compared with earnings of $1.52 per share in last year’s third quarter.
The news sent shares in PPG plummeting. The stock closed at $93.73, down $8.46, or 8.3 percent.
Though PPG’s global volumes have improved in the third quarter, “We are disappointed with this quarter’s earnings-per-share growth rate as we continue to operate in a sluggish economic environment with no clear near-term catalyst for improving global GDP growth,” said Michael McGarry, chairman and chief executive.
“As a result, we are reviewing potential actions to reduce our overall cost structure, both through broad global operating-cost improvements and targeted regional actions where economic conditions are weakest,” Mr. McGarry said.
PPG expects to take an after-tax charge in the third quarter of $500 million to $600 million, or $2.31 per share, in connection with a deal to transfer $1.6 billion in pension liabilities to Massachusetts Mutual Life Insurance and Metropolitan Life Insurance Co. The transfer, announced in June, includes pensions for about 13,400 current salaried and non-union hourly retired workers who began receiving retirement benefits on or before April 1.
Adjusted earnings per share, which don’t include one-time charges such as the pension settlement, are expected to be $1.54 to $1.57 per share, below analysts’ average estimate of $1.71.
The company expects net sales of about $3.8 billion, just short of analysts’ estimates of $3.83 billion.
The company said executives would discuss the results Oct. 20 in a conference call with analysts after it releases its third-quarter report.
Also Friday, PPG’s board of directors authorized a $2 billion share repurchase program effective immediately. The program is in addition to an existing share repurchase plan that had about $520 million remaining as of Sept. 30.
Earlier this week, PPG took over naming rights for the former Consol Energy Center, Uptown. Financial terms of the 20-year deal it reached with the Pittsburgh Penguins to rename the facility PPG Paints Arena were not disclosed.
Cecil-based Consol, which reported a loss for the full-year 2015 and in the first two quarters of 2016, gave up the naming rights six years into a deal that was supposed to run for 21 years.
Joyce Gannon: jgannon@post-gazette.com or 412-263-1580.
First Published: October 8, 2016, 4:00 a.m.
