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PPG chairman won't detail conversations held with activist investor Trian

PPG chairman won't detail conversations held with activist investor Trian

PPG’s Michael McGarry on Thursday declined to share details of talks with activist investor Trian Fund Management which recently disclosed it had taken a 2.9 percent stake in the global coatings giant. 

Speaking to Wall Street analysts during a conference call, Mr. McGarry said, “We engage with all our investors throughout the year and always value their feedback. We also have to be respectful of individual exchanges.”

Trian is known for trying to improve shareholder value in its investments by getting a board seat or shaking up management strategy.

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Asked by an analyst whether PPG’s talks with Trian have been friendly or hostile, Mr. McGarry said he wouldn’t discuss conversations held with any investors.

Michael McGarry, CEO of PPG Industries, at his office at One PPG Place, Downtown, Pittsburgh, March 27, 2017.
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Earlier in the day, PPG said third quarter earnings took a hit because of higher costs, weak foreign currency rates and a decline in demand for some coatings. 

The results weren’t a surprise because PPG last week warned it wouldn’t meet projections for the third quarter. 

Net income was $368 million, or $1.51 per share, down from $393 million, or $1.52 per share last year.

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Adjusted net income excluding special items was $353 million, or $1.45 per share, missing Wall Street analysts’ average estimates of $1.53 to $1.59 per share.

Special items included costs associated with home improvement chain Lowe’s dropping PPG’s Olympic brand products, a global restructuring and expenses tied to a probe of PPG’s internal accounting practices.

Tariffs imposed by the Trump administration also added “some modest costs,” Mr. McGarry told analysts. 

Sales were $3.8 billion, up 1 percent from a year ago.

A paint robot in PPG's Coating Innovation Center, Fed. 18, 2016, in Hampton.
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Unfavorable foreign currency rates impacted sales by more than 2 percent, or $83 million.

Mr. McGarry said net sales growth in local currencies was 3 percent and was boosted by higher selling prices and strong volumes for aerospace and industrial coatings.

Sales of architectural coatings including house paints fell in part because of the impact of losing the Lowe’s business.

Automotive refinish products sales were down because of lower demand and automotive original equipment paint sales were flat, PPG said.

Mr. McGarry said the company plans more price increases and will accelerate its restructuring and cost-cutting actions.

It recently closed two factories and several distribution warehouses, he said. 

The company continues to look for acquisitions and expects to spend $1 billion in cash in the fourth quarter on acquisitions and share repurchases.

Among the deals expected to close in the fourth quarter is the purchase of SEM Products, a Rock Hill, S.C., company that makes specialized automotive refinish products. 

Terms were not disclosed. 

PPG’s shares closed at $98.99, up 87 cents.

This story was updated at 5:15 p.m. Oct. 18, 2018.

Joyce Gannon: jgannon@post-gazette.com or 412-263-1580.

First Published: October 18, 2018, 12:56 p.m.

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