PPG faces risks from lawsuits (contract, patent, environmental, product liability, asbestos, antitrust, employment, securities), including a significant $700+ million judgment in Brazil despite a separation agreement. Environmental remediation costs are substantial and uncertain, with potential future charges of $100-$200 million. Fluctuations in foreign exchange rates and interest rates pose risks to income and assets. Lower sales volumes and indexed-based pricing in automotive and industrial coatings segments are also risks.
Financial Upside
PPG has strong liquidity with $1.3B in cash and short-term investments. The company expects annualized pre-tax savings of $175M from a cost reduction program. Divestitures of the silicas and architectural coatings businesses are expected to generate $860M in pre-tax proceeds. Improved manufacturing productivity and lower overhead costs are also positive factors.
