Pittsburgh, PA-based paints, coating and specialty materials supplier PPG has agreed to sell its architectural coatings business for $550 million to American Industrial Partners (AIP).
The architectural coatings segment in the U.S. and Canada is part of the company’s Performance Coatings division. This segment produces and sells a wide range of products, including interior and exterior paints, stains, caulks, repair products, adhesives and sealants. In 2023, it contributed approximately $2 billion to PPG’s net sales.
The transaction is expected to be finalized in late 2024 or early 2025.
“From a PPG perspective, this transaction, along with the pending sale of our silicas products business, demonstrates the active portfolio management by the company and our Board,” PPG Chairman and CEO Tim Knavish said in an Oct. 17 news release. “These divestitures further optimize our portfolio by improving our organic growth and financial return profiles and will result in increased capability to channel our growth resources to areas where we have the strongest right to win with our customers.”
Cost Reduction Initiative
The company also announced a cost reduction initiative anticipated to yield approximately $175 million in annualized pre-tax savings once fully implemented, with $60 million of that expected in 2025.
“In addition, we are taking decisive self-help actions to reduce our overall cost structure,” Knavish added. “While these decisions are difficult, they are necessary to adjust our fixed cost base and to right-size our company following these two business divestitures. None of these actions will impact our ongoing investments or focus on organic growth.”
This program aims to lower structural costs, primarily in Europe and other international operations, through various facility closures and targeted fixed cost reductions. The initiative is expected to affect around 1,800 positions, mainly in the U.S. and Europe.
3Q Financial Results
PPG reported its 2024 third quarter results on Oct. 16., which showed moderate growth in seven of its ten businesses.
The company posted total 3Q sales of $4.6 billion, up 1% year-over-year. Organic revenue remained flat compared to the year prior.
The company’s net profit of $468 million was up 10% year-over-year.
PPG reaffirmed its 2024 full-year outlook, anticipating organic sales to remain flat.
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