PPG Industries Inc. (PPG) announced that it has inked a deal with China-based automotive glass maker Fuyao Glass America Inc. to sell all the assets of its Mt. Zion, IL, glass manufacturing facility to the latter. The financial terms of the deal were not disclosed. The sale is expected to close in the third quarter of 2014.
The Mt. Zion facility manufactures glass for use in residential and commercial construction markets. PPG Industries will operate the plant for another year and will produce SUNGATE coated glass and clear glass. These products will be eventually produced at PPG’s other North American float glass manufacturing sites.
PPG Industries’ plan to sell off the Mt. Zion facility is in sync with its strategy to focus on its higher-technology, coated glass capabilities for residential and commercial construction application. Glass coatings technology remains PPG’s primary growth factor and the company intends to make further investments toward the improvement of its current capacity and to expand its overall technical capabilities to manufacture more advanced products.
Fuyao has been PPG’s business partner for 13 years and its geographic proximity to major automotive manufacturers makes the Mt. Zion facility well suited for its automotive glass operation. Fuyao plans to rebuild and retrofit the facility’s two production lines to manufacture automotive glass.
Recently, PPG industries released its second-quarter 2014 results. The company topped earnings expectations in the quarter on healthy results across major markets, notably Europe where earnings jumped 28%. Cost reduction measures and strength in the automotive OEM coatings market supported the results.
Profit from continued operation (as reported) was $393 million or $2.80 per share in the second quarter, climbing roughly 24% from $318 million or $2.19 per share posted a year ago. Consolidated profit rose 13% year over year to $386 million or $2.75 per share. The improvement was led by strong performance in Europe as PPG gained from gradual economic recovery in the region.
Barring one-time items, the company raked in earnings from continuing operations of $2.83 a share in the quarter that topped the Zacks Consensus Estimate of $2.79. The adjusted earnings exclude pension-related costs and acquisition charges.
Revenues moved up 5% year over year to $4,082 million in the reported quarter. It fell short of the Zacks Consensus Estimate of $4,097 million. The company benefited from higher volumes across major regions in the quarter.
PPG Industries is a Zacks Rank #3 (Hold) stock.
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