PPG to slash 1,100 jobs in restructuring
Cuts caused in part by Lowe’s decision to drop company’s Olympic coatings line
Paints maker PPG will cut 1,100 jobs — about 2 percent of its workforce — and take a pretax restructuring charge of between $80 million and $85 million in the second quarter in part because of a decision by Lowe’s home improvement stores to stop selling PPG’s Olympic brand paints and stains.
In a filing Friday with the Securities and Exchange Commission, the Downtown-based company said it had approved a restructuring plan in response to “a customer assortment change in our U.S. architectural coatings business,” as well as ongoing price increases for raw materials.
In February, Lowe’s said it was dropping the PPG brand and making rival paint producer Sherwin Williams, based in Cleveland, its exclusive supplier. Lowe’s, based in North Carolina, operates more than 2,300 stores.
PPG hopes to make up some of the loss through a recently announced deal to sell its Olympic stains at Home Depot stores in the U.S. The Atlanta-based hardware chain has about 2,200 stores in the U.S., Canada and Mexico.
Sales of PPG products at Lowe’s stores were below $300 million annually, the coatings giant said. The company generated total revenues of nearly $15 billion last year.
When news broke about Lowe’s decision to drop the Olympic brand, PPG said it would “aggressively and appropriately adjust its cost structure to adapt to this change.”
Of the total restructuring charges, about $75 million to $80 million will be for employee
severance and other cash costs, the company said.
The restructuring is expected to be finished by June 2019, according to the SEC filing.
PPG employs about 47,200 worldwide, and a spokesman said the company had no further details about the job cuts beyond the filing.
In the Pittsburgh region, PPG employs about 2,400 at its Downtown headquarters and facilities in Cranberry, Allison Park, Monroeville, Springdale and Harmar.
Last week, the company said it was investigating possible improper accounting practices in its first-quarter results.
For the quarter, PPG reported profit of $347 million, or $1.38 per share, on sales of $3.8 billion.
Earnings per share were up almost 4 percent despite rising costs in the raw materials the company uses, PPG’s chairman and chief executive, Michael McGarry, told analysts in a conference call.
The company has been trying to negotiate on pricing issues with customers to counter rising raw material costs for months. In the first quarter, price increases totaled nearly 2 percent across all global regions, PPG said.
The company’s shares closed Friday at $107.97, up 27 cents.