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PPG to cut costs in response to COVID-19

June 16/2020

MOSCOW (MRC) -- PPG Industries announced a plan to cut about USD160-170 million/year in costs in an effort to reduce the company’s cost structure due to the impact of the COVID-19 pandemic. The plan includes staffing reductions, under a “voluntary separation program,” in the US and Canada, PPG says.

“These measures will enable the company to come out of the crisis with lower structural costs,” says PPG chairman and CEO Michael McGarry. “Despite efforts to reduce our total costs, we remain committed to continuing our investments in growth-related initiatives, including fully funding our research and development for products, services and digital capabilities that will drive long-term growth."

PPG will record a pre-tax restructuring charge of USD160-180 million, or 52-58 cents/share, in connection with the cost-cutting program. An additional USD10 million in restructuring costs is likely over future quarters. The second-quarter costs are mostly related to employee severance, although the precise number of job cuts the program entails was not disclosed.

PPG also noted that “the aggregate impact [of COVID-19] and pace of recovery is consistent with the company’s expectations. This includes strong demand for architectural do-it-for-yourself coatings, aerospace applications for military programs, and packaging coatings, but which has been more than offset by soft demand for commercial aerospace, automotive OEM, automotive refinish, architectural do-it-for-me and certain general industrial coatings end uses."

Volumes were down by about 35% year-on-year (YOY) in April, and down by about 30% YOY in May, according to PPG. There was YOY volume improvement in China through the spring, and volumes grew in the US and Europe sequentially from April to May, with further sequential increases expected in June.

As MRC informed earlier, Russia's output of products from polymers grew in April 2020 by 11.2% year on year due to quarantine restrictions. However, this figure increased by 3.4% year on year in the first four months of 2020.  According to the Russian Federal State Statistics Service, April production of unreinforced and non-combined films decreased to 107,000 tonnes from 110,400 tonnes a month earlier. Output of films products grew in the first four months of 2020 by 12.5% year on year to 402,800 tonnes.
Author:Anna Larionova
Tags:pigmentniy krasitel, paints and coatings, PPG.
Category:General News
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