July 17--PPG -- Industries Inc. said on Thursday that second-quarter profit jumped 13.2 percent and sales improved as it continues a growth strategy tied to paint.
Sales in automotive and aerospace segments improved the most during the quarter because of strong demand, Downtown-based PPG said. It has been restructuring its businesses through acquisitions in the paint industry, where it has become the world's largest manufacturer, and divestitures of other units.
"The benefits of our new business portfolio are measurable," CEO Charles E. Bunch said, citing an average quarterly increase in earnings per share of more than 30 percent in the past year and a half.
Paint now accounts for more than 90 percent of PPG's annual revenue.
PPG reported net income of $386 million, or $2.75 a share, up from $341 million, or $2.35 a share, a year ago. Sales rose 5.1 percent to $4.1 billion from $3.9 billion in the same period last year. PPG's adjusted earnings per share of $2.83 from continuing operations beat analysts' consensus estimates by 5 cents. Revenue was slightly below estimates
PPG shares traded at $206.58 this afternoon, up 79 cents. The stock is up 8.9 percent this year.
Separately, the company disclosed the appointment of Michael H. McGarry, currently executive vice president, to chief operating officer, effective Aug. 1. He will have responsibility for all of PPG's strategic business units, operating regions, information technology and other functions. He will continue to report to Bunch.
"Strategically, we continue to complete significant actions focused on expanding our global coatings presence," Bunch said.
PPG's April 2013 purchase of AkzoNobel NV's North American architectural coatings unit for $1.05 billion pushed PPG into the No. 1 position worldwide. Its latest deal is the purchase of a leading paint company in Mexico on June 30.
"We are still interested and have the appetite for more," Bunch said after PPG announced an agreement to acquire Consorcio Comex, S.A. de C.V., for $2.3 billion.
That deal will be PPG's second-largest acquisition after SigmaKalon Group, a Dutch paint producer it bought for $3.1 billion in 2008. Comex, headquartered in Mexico City, makes paint for home, business and industrial customers, and sells its products in Mexico and Central America through 3,600 independent stores.
During the past 15 years, Bunch said PPG has made 60 acquisitions in pursuit of its paint expansion strategy. With Comex, PPG will have an estimated 12 percent of market share worldwide, analyst Laurence Alexander of Jefferies LLC in New York said in a report.
PPG has said it plans to spend as much as $4 billion on acquisitions and share repurchases this year and in 2015.
Last year, PPG sold its commodity chemicals business for $2.2 billion and its 51 percent stake in Transitions Optical, the inventor of plastic eyewear that darkens in bright sunlight, for $1.73 billion to partner Essilor International of France.
It will use money from the Transitions sale, cash on hand plus cash generated, to fund that plan, without borrowing, Chief Financial Officer Frank S. Sklarsky has said.
John D. Oravecz is a Trib Total Media staff writer. Reach him at 412-320-7882 or firstname.lastname@example.org.
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