Coatings and Specialty Materials company, PPG Industries Inc. (PPG - Free Report) has issued guidance for the first quarter of 2012. The company expects adjusted earnings to be in the range of $1.75 to $1.80 per share for the first quarter compared with $1.40 per share, as reported in the year-ago quarter.
After including restructuring expenses and costs associated with acquisition and environmental remediation, the company expects earnings to be in the range of 2 to 7 cents per share. The company anticipates that it will incur pretax restructuring charge of $208 million including cash costs of around $160 million and about $48 million related to the net write-off of specific assets and other non-cash items. Most of the restructuring activities will take place in Europe. PPG plans to lay off 2,000 employees mostly in Europe owing to weak demand.
The restructuring actions are expected to result in annual savings of about $140 million with roughly $40 million and $50 million of the savings expected in 2012. As per the company, the first quarter saw improved business conditions due to customer restocking and lower natural gas costs in the U.S.
On top of restructuring charges, the first quarter will also include a $160 million pretax charge with an after-tax charge of $100 million, or 64 cents per diluted share. This environmental reserve is partly related to the environmental works at the company’s former Jersey City, New Jersey Plant.
As per the company, the restructuring efforts are a part of its strategy to be at par with its competitors around the world. PPG competes with the DuPont Performance Coatings segment of EI DuPont de Nemours & Co. (DD - Free Report) and BASF Coatings AG.
We currently have a long-term Neutral recommendation on PPG. The stock maintains a Zacks #1 Rank, which translates into a short-term (1 to 3 months) Strong Buy rating.