Big restructuring moves at PPG
PPG, the Pittsburgh-based paint and coatings giant, has launched a restructuring plan aimed at reducing global costs.
The company said the move is a result of the weak economic conditions brought about by the COVID-19 pandemic.
The manufacturer said that it plans to deliver between $160 and $170 million in annual pre-tax cost savings, with about $25 million to $35 million saving projected for 2020. The remainder of annual savings is anticipated by year-end 2021.
"Given the broad economic impact relating to the COVID-19 pandemic and the recovery timeline in a few end-use markets, we are taking decisive action to further adjust our cost base," said Michael McGarry, PPG chairman and CEO. "These measures will enable the company to come out of the crisis with lower structural costs.
PPG will record a restructuring charge of $160 to $180 million pretax and $125 to $140 million after-tax in the second quarter 2020, which is nearly all related to employee severance. The company did not provide additional details regarding employee downsizing.
The company will report its second quarter financial results in July.
Additionally, PPG will incur other associated restructuring-related costs of approximately $10 million over future quarters. The total cash outlay to complete these actions is approximately $180 million, with about $110 million expected in 2020 and the remainder in 2021.
PPG said it has realized strong demand in architectural do-it-for-yourself coatings, aerospace applications for military programs, and packaging coatings. But this has been offset by soft demand for commercial aerospace, automotive original equipment manufacturer (OEM), automotive refinish, architectural do-it-for-me and general industrial coatings.
The company reported that sales in April fell 35% as sales in May dropped 30%, compared to the prior year.
The company said the move is a result of the weak economic conditions brought about by the COVID-19 pandemic.
The manufacturer said that it plans to deliver between $160 and $170 million in annual pre-tax cost savings, with about $25 million to $35 million saving projected for 2020. The remainder of annual savings is anticipated by year-end 2021."Given the broad economic impact relating to the COVID-19 pandemic and the recovery timeline in a few end-use markets, we are taking decisive action to further adjust our cost base," said Michael McGarry, PPG chairman and CEO. "These measures will enable the company to come out of the crisis with lower structural costs.
PPG will record a restructuring charge of $160 to $180 million pretax and $125 to $140 million after-tax in the second quarter 2020, which is nearly all related to employee severance. The company did not provide additional details regarding employee downsizing.
The company will report its second quarter financial results in July.
Additionally, PPG will incur other associated restructuring-related costs of approximately $10 million over future quarters. The total cash outlay to complete these actions is approximately $180 million, with about $110 million expected in 2020 and the remainder in 2021.
PPG said it has realized strong demand in architectural do-it-for-yourself coatings, aerospace applications for military programs, and packaging coatings. But this has been offset by soft demand for commercial aerospace, automotive original equipment manufacturer (OEM), automotive refinish, architectural do-it-for-me and general industrial coatings.
The company reported that sales in April fell 35% as sales in May dropped 30%, compared to the prior year.