|
Thursday,
June 11, 2009
(Cont'd from
above)...
Jim (cont'd):
Jim:
Mr. Bunch
welcome to Mad
Money...
Charles:
Thank you, Jim. It
is great to be here.
Jim:
Terrific that
you are the show, I
have to tell you in
the ’80’s and ’90’s
when I saw the
economy turning down
I used to buy puts,
or short PPG… and
the reason that I
did it was that I
knew that you were
just a play on
automobiles… that is
what you did. Could
you please describe
the transformation
of PPG from say 1990
to where it is now?
Charles:
Well, we have moved
our company, or
transformed it, from
I would say almost a
third of our sales
20 years ago that
were tied to the
automotive OEM
industry, to now,
today, less than…
excuse me, 15% of
our sales are to the
automotive OEMP. And
in that we have now
sold off last year
our automotive glass
business, in the
third quarter of
last year. And so
our remaining
exposure is in
coatings, automotive
OEM coatings, and we
sell around the
world to all of the
manufacturers. So we
are not overly
dependent on any one
geographic region,
or manufacturer.
Jim:
Now, there was a
time that I felt
that if we had a
slowdown of the kind
of precipitous way
that we had… that
you would lose
money? That is not
happening is it?
Charles:
No, right now with
our coatings
exposure we are
profitable, solidly
profitable in our
segments with the
exception of our
glass segment. But
right now, as a
corporation in the
fourth quarter, and
the first quarter, I
think that you saw
some of the
resiliency that we
have talked about in
the new PPG. And our
reliance on coatings
and optical.
Jim:
Mr. Bunch, one
of the things that I
have asked a lot of
industrial people
is, have you seen
any uptick at all?
Now Air Products
said that they had.
Most of the
companies that I
have had on, have
said listen May was
not any good to be
honest, and June is
not any good. Now, I
thought that you saw
a volume pick up in
March according to
your call, is that
continuing?
Charles:
Yes, we are starting
to see some positive
volume in our Asian
businesses. Now,
this is not a full
story, it is a mix
between induce
markets and
countries in Asia.
But we are starting
to see some
improvement, which
has continued here
in the second
quarter.
Specifically in our
largest market in
Asia and that is
China.
Jim:
But, Asia only
represents right now
about 10% of your
revenues?
Charles:
A little over 15%
now, Jim. It has
been growing nicely.
Jim:
Now, there is a
business that to me
does not sound like
PPG at all. But I
think the new PPG is
a little bit
implamatic. Your
optical business, I
think that it is
exciting. I think
that it is fast
growing. Tell us
about it.
Charles:
This is our
transitions optical
business. This is a
home grown organic
business, we
developed with our
proprietary
technology. It is
foto-chromic lens
technology for
plastic lenses. We
have grown this
business from
nothing to almost a
billion dollars in
sales. We have now,
we are now selling
almost 20% of every
prescription lens in
the United States is
now our proprietary
transition product.
And we think that we
have plenty of room
to grow here in
North America and
around the world. So
it is certainly a
growth opportunity,
great margins, and
we think that it is
going to be a good
story going forward
on a global basis.
Jim:
Alright, now the
old days when you
were a pure glass
manufacturer,
natural gas a huge
component. Natural
gas in the $3 range,
how important is
that as a swing
concept to you,
because it was at
$13 literally last
year at this time,
and now it is at $3
and change. Are you
locking in, how
important is it as a
earnings metric for
you?
Charles:
It is very helpful.
Natural gas is
largest single raw
material, we use it
mainly for energy
production. This run
down to below $4 at
MCF has been very
helpful. However, we
have had a history
of hedging our
natural gas buys.
Typically we have a
third to 50% hedged,
so we are benefiting
this year. Not
completely because
we still have some
hedges at some lower
prices. But it is
helping us this
year. And it will
help us in 2010 and
beyond. Especially
in our energy
intensive
businesses, in glass
and commodity
chemicals.
Jim:
Chuck Bunch,
Chairman and CEO of
PPG Industries Inc. (PPG*),
thank you so much
for coming on the
show.
Charles:
Thank you, Jim.
▼ ▼
▼ ▼
▼
 The
Bottom Line!:
Okay, now you see
what I am talking
about… you need a
stock that has a
good yield… this is
an accidentally high
yielder because the
stock has come down…
a safe yield… good
earnings power…
because when the
economy turns people
are not going to
want to own the
drugs and the foods…
they are going to
want to buy
PPG Industries Inc. (PPG*)…
this is one that I
buy myself for my
trust… I am telling
you… buy, buy, buy…
if you can get this
under $45, I think
you are going to be
very happy.
[verbatim recap]
[end of segment]
Read Jim's next Segment
here
Read Jim's next Segment
here
|
