OSHA Set to Fine PPG - Analyst Blog

Pittsburg-based, PPG IndustriesInc. ( PPG ) is on the verge of facing a $90,000 fine for violating four safety regulations at its Barberton, Ohio specialty chemicals plant from the U.S Occupational Safety and Health Administration (OSHA). OSHA stated that the company has "willfully" operated an unguarded winder machine and thus has decided to impose the fine.

As per the agency, the workers were at risk as the machine lacked a safety guard. PPG also cited three other serious violations. The agency reported that PPG did not ensure proper machine guarding to protect its workers from the point of operation..

However, PPG announced that it ill review the matter with OSHA.

In October 2011, PPG released its third quarter 2011 results. The company posted net income of $311 million or $1.96 per share compared with $262 million or $1.58 in the year-ago quarter. The results exceeded the Zacks Consensus Estimate by 3 cents.

Net sales in the quarter came in at $3.8 billion, up 11% from $3.5 billion in the third quarter of 2010 and were almost in line with the Zacks Consensus Estimate of $3.89 billion. The improvement was attributable to improved demand, higher pricing in each of its coatings businesses, successful cost reduction initiatives and a gradual industrial recovery worldwide, partly offset by rising raw material costs.

During the quarter, the company announced its agreement to acquire Dyrup A/S.

Going forward, the company expects the current macro and regional economic trends to persist, supported by the October activity levels in most of its businesses. In general, the company anticipates a normal seasonal fourth quarter.

The company also anticipates further pricing gains across each of its segments. PPG continues to work on initiatives to deploy its cash to further drive earnings. PPG is continuing to utilize its strong cash position. In the second half of 2011, the company expects to deploy $500 million to $1 billion of cash for earnings accretion, and will pursue its tradition of returning cash to its shareholders.

The resumption of automotive OEM production and its position in high-growth businesses and regions, such as aerospace and Asia/Pacific, respectively, will supplement PPG's growth for the remainder of the year. Although inflation has moderated somewhat, PPG intends to achieve better pricing for its businesses, where it has failed to fully offset inflation despite aggressive cost management and further pricing actions this quarter.

The strong third-quarter performance, along with the successful adoption of growth strategies and their meaningful implementation, instill confidence in the company. In addition, the macro economy and the concerned industry are also showing signs of recovery.

PPG Industries has a Zacks #3 Rank ('Hold') in the short term and we also have a long-term Neutral recommendation on the stock.

EI DuPont de Nemours & Co. ( DD ) is also major player in the industry.

DU PONT ( EI ) DE ( DD ): Free Stock Analysis Report

PPG INDS INC ( PPG ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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