PPG Industries, Inc. · NYSE:PPG
PPG Industries — Investor Presentation (February 2010)
45 slides from PPG Industries's investor presentation, Feb 23, 2010
Slide 1: Automotive OEM Coatings
Automotive OEM Coatings Bill Wulfsohn Sr. VP, Industrial Segment Tim Knavish VP, Automotive Coatings - Americas February 23, 2010 PPG Industries, Inc. 1
Slide 2: Core Themes
Core Themes At $4B - $6B, Automotive Coatings is a key segment of the coatings market PPG has broad strength and balance within the Automotive industry PPG has a long history of aggressive actions driving profitable growth and successful leadership PPG has clear strategies to capitalize on significa
Slide 3: Coatings Industry
Coatings Industry Global Coatings = $87B Global Coatings by Region Global Coatings by Mix Others Aero 5% 11% North Pkg 6% America 24% Auto Special OEM 9% Purpose Arch Asia 49% GI 44% 51% Refinish Pacific 35% 18% Europe 30% M&P 18% Automotive Coatings is a $4B - $6B market Source: Orr & Boss February
Slide 4: Automotive Coatings Industry
Automotive Coatings Industry Global Coatings = $4B - $6B Global Coatings by Region South America 4% Other 6% North America 18% Asia Pacific 36% Europe 37% Asia is expected to be the largest market in 2010 More cars are produced in China than U.S. Source: PPG Estimate February 23, 2010 PPG Industries
Slide 5: Automotive Coatings Industry: Business Overview
Automotive Coatings Industry Business Overview Pretreatment Electrocoat Primer Basecoat Clearcoat Excluding Japan and Adjacencies Core Layers Description Size (MM) Conversion coating that improves corrosion resistance and paint Pretreatment $150 adhesion Electrocoat Electrically deposited coating th
Slide 6: PPG Automotive Coatings: OEM Process Movie Clip
PPG Automotive Coatings OEM Process Movie Clip February 23, 2010 PPG Industries, Inc. 6
Slide 7: Automotive Coatings Is Core to PPG's Portfolio
PPG Automotive Coatings 2009 PPG Coatings Sales = $9B Auto OEM Automotive Coatings Is Core to PPG’s Portfolio February 23, 2010 PPG Industries, Inc. 7
Slide 8: PPG Competitive Advantages
PPG Competitive Advantages Strong market position….. All geographies All technologies Customer mix History of sustained investment in capabilities and technology leadership Well positioned Joint Ventures and Partnerships February 23, 2010 PPG Industries, Inc. 8
Slide 9: Strong market positions
Strong market positions….. PPG Industries, Inc. 9
Slide 10: Competitive Landscape
Automotive Coatings Industry Competitive Landscape North America Europe Other Other PPG DuPont PPG DuPont BASF BASF Asia Pacific South America Other PPG KCC Other PPG BASF DuPont Nippon BASF DuPont Kansai Ex - Japan Source: PPG Estimates February 23, 2010 PPG Industries, Inc. 10
Slide 11: Competitive Landscape: Strong Market Position in All Regions
Automotive Coatings Industry Competitive Landscape North America Europe Other Other PPG DuPont PPG DuPont BASF BASF Asia Pacific China South America Other Other KCC PPG KCC PPG Other PPG BASF Nippon DuPont Nippon BASF BASF DuPont Kansai Kansai DuPont Ex - Japan Strong Market Position in All Regions
Slide 12: Industry Sales by Layer vs PPG Sales by Layer
Automotive Coatings Industry Industry Sales by Layer PPG Sales by Layer PT PT Clear Clear E-Coat E-Coat Primer Base Base Primer Strong Position in All Layers Source: PPG Estimates February 23, 2010 PPG Industries, Inc. 12
Slide 13: Customer Base
Automotive Coatings Industry Customer Base North American Based European Based PPG PPG Other Other Japanese / Korean Based in NA Chinese / Indian Domestics PPG PPG Other Other Broad Mix of Customers Source: PPG Estimates February 23, 2010 PPG Industries, Inc. 13
Slide 14: History of investment in capabilities and technology leadership
History of investment in capabilities and technology leadership PPG Industries, Inc. 14
Slide 15: PPG Innovations
PPG Structure PPG Automotive Coatings 1975 1980 1985 1990 1995 2000 2005 2010 PPG Innovations Continuous Strategic Investment and Innovation February 23, 2010 PPG Industries, Inc. 15
Slide 16: Research & Development
PPG Automotive Coatings Research & Development PPG has been awarded an R&D 100 Award 9 times in the last 14 years Presented annually by R&D Magazine for most significant technology-related new products and processes PPG has been a finalist for an Automotive News PACE Award 7 times in the last 9 year
Slide 17: Well Positioned Joint Ventures
Well Positioned Joint Ventures PPG Industries, Inc. 17
Slide 18: Joint Ventures
Joint Ventures PKAF Asian PPG PPG Helios 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 Scope Scope Scope • Alliance with Kansai Paints • JV with Asian Paints • JV with HeliosPaint • Formed in 2004 • Formed in 1997 • Formed in 2000 • Target Japanese OEMs in
Slide 19: Historical Performance
Historical Performance PPG Industries, Inc. 19
Slide 20: Historical Performance
PPG Automotive Coatings Historical Performance Global Builds PPG Sales 70 NA EMEA AP SA NA EMEA AP SA 60 50 MM Builds 40 30 20 10 0 2005 2006 2007 2008 2005 2006 2007 2008 PPG Growth Outperforms the Market Source: CSM Worldwide February 23, 2010 PPG Industries, Inc. 20
Slide 21: Global Chaos
Automotive Coatings Global Chaos Brazil auto sales fall sharply in October February 23, 2010 PPG Industries, Inc. 21
Slide 22: 2009 Dynamics
PPG Automotive Coatings 2009 Dynamics 2007-2009 North America Builds 16 14 12 10 MM Builds 8 6 4 2 0 2007 Builds Clunkers Other 2009 EMEA Builds Asia Builds Excluding Japan Sales 25 25 20 20 MM Builds MM Builds 15 15 10 10 5 5 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Europe Other China
Slide 23: Aggressive Response to Restore Profitability
Aggressive Response to Restore Profitability PPG Industries, Inc. 23
Slide 24: Aggressive Cost and Business Measures
PPG Automotive Coatings Aggressive Cost and Business Measures Restructuring Actions Manufacturing Rationalization Overhead Reduction Facility Action Clarkson, Ontario Closed Baton Rouge, LA Closed Saultan, FR Exited Paint Mfg 20% European Mfg Headcount Reduction Satellites (3) Closed North America M
Slide 25: Industrial Coatings Segment Earnings Improvement
PPG Automotive Coatings Industrial Coatings Segment 100 Earnings Improvement 80 60 40 $ MM 20 0 -20 -40 -60 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Aggressive Restructuring Drives Profit Improvement February 23, 2010 PPG Industries, Inc. 25
Slide 26: Rebound Build Forecast
Automotive Coatings Rebound Build Forecast Excluding Japan 10% Growth CAGR 60 China's auto sales hit NA EMEA AP SA record high in January 50 40 MM Builds 30 20 10 0 2009 2010 2011 2012 Source: PPG February 23, 2010 Source: PPGCSM Industries, WorldwideInc. 26
Slide 27: Looking Forward
Looking Forward Leverage market demand growth with strong focus on the BRIC countries Sustain profitability with content growth, cost reduction, pricing discipline and new value- added technology February 23, 2010 PPG Industries, Inc. 27
Slide 28: Industry Outlook
Industry Outlook North America: Demand Recovery EMEA: Sub-Region Shift W. Europe Other 16 45 14 40 12 35 Builds MM Builds MM 10 30 8 25 20 6 15 4 10 2 5 0 0 2007 2009 2011 2013 2007 2009 2011 2013 Asia: Sustained Growth SA: Incremental Growth 30 India 6 25 Korea 5 20 China Builds MM 4 Builds MM 15 3
Slide 29: Leverage Growth in BRIC
Leverage Growth in BRIC PPG Industries, Inc. 29
Slide 30: Accelerate Growth in Asia
Accelerate Growth in Asia 14 MM China Builds Impact Asia Capacity Expansion 12 Largest Technology Action Plan Timing 10 Supplier in China 8 Solventborne Wuhu Phase II 2010 6 Add WB 4 Waterborne Capability in 2010 Tianjin 2 E-coat New ZHG Plant 2011 0 2004 2006 2008 2010 2012 2014 India Builds Asian
Slide 31: Asia Pacific Perspective: China
Automotive Coatings Industry • Over 80 OEMs Asia Pacific Perspective: China • PPG is fully owned Toyota Chandchun II • Global OEMs require Hyundai Shunyi III Chinese partner (max Hafei Auto 50% ownership) BAIC BDA FAW-VW Changcheng Greatwall New plants announced to be built between 2010 and 2014 Bei
Slide 32: Asia Pacific Perspective: India
Automotive Coatings Industry Asia Pacific Perspective: India Tata Top APPG Customers New OEM plants Maruti Suzuki Honda Honda Tata ULCC Force Motors Man Force 15 new plants announced to be built between 2009 and 2014 GM ` Tata Mahindra Renault Mahindra Tata GM Bajaj Renault Hyundai Motor Bajaj Ford
Slide 33: Emerging Regions Driving Growth in Small and Midsize Segments
Automotive Coatings Industry Emerging Regions Driving Growth in Small and Midsize Segments 2007 2010 2014 2007 vs. 2014 Builds 30% 37% 34% 41% 40% 29% Small +7.8 MM Medium +6.2 MM 29% 29% 31% Large +0.6 MM Source: CSM Worldwide Large Vehicle Mid Size Vehicle Small Vehicle PPG Maintains Content Per V
Slide 34: Emerging Regions Driving Growth in Small and Midsize Segments
Automotive Coatings Industry Emerging Regions Driving Growth in Small and Midsize Segments 2007 2010 2014 2007 vs. 2014 Builds 30% 37% 34% 41% 40% 29% Small +7.8 MM Medium +6.2 MM 29% 29% 31% Large +0.6 MM Source: CSM Worldwide Large Vehicle Mid Size Vehicle Small Vehicle Sealants PPG Maintains Cont
Slide 35: Sustain Profitability
PPG Automotive Coatings Sustain Profitability Drivers Actions February 23, 2010 PPG Industries, Inc. 35
Slide 36: Sustain Profitability
PPG Automotive Coatings Sustain Profitability Drivers Actions February 23, 2010 PPG Industries, Inc. 36
Slide 37: Market Trends
Automotive Market Trends Environmental Energy • Eco-efficiency to improve resource use • Move to fuel efficient platform • Vehicle interior emissions designs, conservation approaches • Resource availability • Shift in vehicle segment sales • Product positioning based on ‘Green’ • Local production •
Slide 38: Sustain profitability with……
Sustain profitability with…… PPG Industries, Inc. 38
Slide 39: New Product Technology
PPG Automotive Coatings New Product Technology 2010 - 2014 Market Drivers Pretreatment ZircoBond 2 Energy Cost / Durability / Electrocoat High Throw ED7000 / Dura-Prime® Environment Appearance / Chip / Primer Waterborne OPP3e / OPP4 Environment Basecoat Next Gen Topcoat System Cost / Energy / Appear
Slide 40: Industry Trends: Conventional Process
Automotive Coatings Industry Industry Trends Conventional Process Clean, Pretreated Bake Cool Body-in-White E-Coat Rinse Cycle Bake Primer Sealer + Gel Bake Sanding Cool Sanding Basecoat Booth Inspection Cool Bake Clearcoat Pick-Up February 23, 2010 PPG Industries, Inc. 40
Slide 41: Industry Trends: Compact Process
Automotive Coatings Industry Industry Trends Conventional Process Compact Process Clean, Pretreated Bake Cool Body-in-White E-Coat Rinse Cycle Sealer + Gel Bake Sanding Compact Process Booth Inspection Cool Bake Clearcoat Pick-Up Eliminates ~20% of the Automotive paint line cost BMW example February
Slide 42: Compact Process Impact – Customer Cost Model
PPG Automotive Coatings Industry Trends Compact Process Impact – Customer Cost Model $255 / unit $227 / unit Indirect Customer Value: Mat'l • Reduced Footprint • Reduced Capital Energy • Less Paint Usage Labor PPG Value • Differentiated Coatings Capital • Technology Driven Paint Conventional Compact
Slide 43: Strategic Summary
Strategic Summary At $4B - $6B, Automotive Coatings is a key coatings segment PPG has broad strength and balance within the Automotive industry Strong global presence utilizing technology with a healthy mix of customers PPG has a long history of aggressive actions driving profitable growth and succe
Slide 44: Recent Successes at BMW
PPG Automotive Coatings Recent Successes at BMW • Compact Process Paint share gain • Mini Cooper in Oxford • Launch of Compact Process Basecoats • Spartanburg • APO Clearcoat at BMW • Munich • Spartanburg Early Technology Adopter • Powder Clearcoat • Waterborne Primer • APO Clearcoat • B1:B2 Compact
Slide 45: Forward-Looking Statement
Forward--Looking Statement Forward Statements contained herein relating to matters that are not historical facts are forward-looking statements reflecting PPG’s current view with respect to future events and financial performance. These matters within the meaning of section 27A of the Securities Act
PPG Industries — Investor Presentation (February 2010) on 6ix