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Could PPG be one to watch?

BY HBSDEALER Staff

PPG Architectural Finishes, the paint and coatings division of chemical, glass and plastics giant PPG Industries, has long lagged behind its larger competitors — Sherwin-Williams, Benjamin Moore, ICI, Dunn-Edwards and Kelly-Moore.

But following the sale announced in September of two of PPG’s fine chemicals businesses to an Italian firm, PPG CEO Charles Bunch said the company plans to focus on becoming the “leading coatings and specialty products and services company.”

The numbers certainly support his goal, as well as a slew of recent international acquisitions and new product offerings.

The company’s retail store base has shown exponential growth in the past 10 years, going from 126 locations in 1998, to 315 in 2004, to 448 in 2006, according to the Home Channel News Top 500 Scoreboard of home channel retailers.

PPG Architectural Finishes ranks 45 on that list, moving up from 53 last year. Sales in the coatings business rose to $240 million, again showing wide gains over previous years — $155 million in 1998, $194 million in 2004 and $200 million last year.

Including all of its divisions, PPG’s second-quarter sales passed the $3 billion mark, making it the “17th consecutive quarter in which we delivered a year-over-year sales record,” according to William Hernandez, senior vp and CFO, in the company’s second-quarter conference call.

The record performance “was led by our strongest operating margin businesses,” particularly in architectural coatings, which saw sales rise 31 percent, Hernandez said.

The company saw much of its coatings growth through international sales. Still, sales at coatings stores also contributed to growth of about 2 percent, in spite of a downturn in the residential construction market. In this way, PPG has shown the strength inherent in a diversified customer base — while housing starts declined 20 percent, Hernandez said, commercial construction grew 8 percent. PPG’s coatings business breaks down a sales base of approximately 10 percent residential consumers, 80 percent professionals and 10 percent to industrial and commercial customers.

“We have stated continuously that these businesses have large commercial construction content, and our performance certainly reflects that fact,” he said.

Additionally, PPG has made acquisitions worldwide in the past year. Most recently, the company acquired Barloworld Coatings Australia, which added 85 retail locations as well as the consumer paint brands Taubmans, Bristol and White Knight.

International acquisitions have been important, Hernandez said, in offsetting slower growth in North America. “We’ve experienced lower volumes in our professional channels, both in our stores and distributors,” he said. “We anticipate low growth rates in North America, sustained growth in Europe and continued high growth in China and other emerging regions.”

Other acquisitions in the past two years have included assets of Shanghai Sunpool Building Material’s paint brands O’need and Kaleidoscope, California’s Spectra-Tone paint and Australia’s Protec coatings business.

Like many home improvement companies, PPG does not anticipate a housing market recovery until “at least early 2008.” But with a coatings business so entrenched in the commercial and industrial market, it would appear the company is well positioned to grow in tough times.

For more on PPG, read the Oct. 8 issue of Home Channel News magazine. For subscription information, click here.

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NLBMDA kicks off annual conference

BY HBSDEALER Staff

Las Vegas The National Lumber and Building Materials Association (NLBMDA) kicked off its Industry Summit yesterday by deciding to turn its day-to-day operations over to a trade association management company. In a unanimous decision, the NLBMDA board voted on Oct. 4 to sign a contract with SmithBucklin, which will handle staffing, accounting, educational programs, government relations, and other functions.

The NLBMDA will close its office in Washington D.C. and move into SmithBucklin’s office, also inside the Beltway, during a 60-day transition period. By contracting with an outside firm, the trade association will save approximately $170,760 a year, according to an analysis by SmithBucklin.

Other issues discussed during the board meeting were state and federal legislation that deal with frivolous lawsuits, illegal logging, OSHA regulations and organized scams against retailers.

The three-day conference, held at the J.W. Marriott, continues today with sessions on strategic visioning and market differentiation. Other events include a silent auction, a golf tournament and networking receptions.

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Weyerhaeuser named to sustainability index

BY HBSDEALER Staff

Forest products giant Weyerhaeuser has been named to the Dow Sustainability Index, a service that tracks the financial performance of the leading sustainability-driven companies worldwide.

According to a joint press release from Dow Jones and Weyerhaeuser, the company is the only North American forest products company now in the industry category of the index.

The sustainability index conducts an annual assessment of corporations and their impact on economic, environmental and social issues. The goal is to show how sustainability “is being defined in the global marketplace,” while helping asset managers track sustainability-driven investment portfolios, according to the companies.

“Sustainability is a core value at Weyerhaeuser,” said Steven Rogel, chairman, president and CEO. “In all we do, from renewing our forests, to reducing the environmental footprint of our manufacturing operations, to building homes, to recovering paper for recycling, Weyerhaeuser strives to act sustainably.”

Selection to sustainability index was based on a third party assessment of Weyerhaeuser – the company took part in Dow Jones’ review process by submitting an application and providing other company information.

The Federal Way, Wash.-based company plans to release its most recent earnings statement on Oct. 31.

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