PITTSBURGH, US: PPG Industries Inc said that its board of directors approved significant and broad restructuring actions to reduce its global cost structure. The actions are focused on certain regions and end-use markets where business conditions are weakest, and they are targeting structural reductions in operating, functional and administrative costs.
The company will record a pretax restructuring charge of $190 million to $200 million, or 53-58 cents per diluted share, in the fourth quarter 2016, of which approximately $140 million represents cash costs and $50 million to $60 million is related to the write-down of certain assets and other non-cash costs. Of the approximately $140 million total cash outlay, about $110 million is expected in 2017, with the balance to occur in 2018.
In addition to the abovementioned pretax charge and cash costs, approximately $15 million of incremental restructuring-related cash costs are expected during 2017, for certain items that are required to be expensed on an as-incurred basis.
When completed, the company expects the restructuring actions to generate $120 million to $130 million in annual savings, with $40 million to $50 million of savings projected to be realised in 2017 and the remainder of the expected annual savings to be substantially realised by year-end 2018.
“These measures will better align our resources with anticipated ongoing business conditions and will keep PPG competitive in the end-markets in which we participate. Even with this broad effort to reduce our total costs, we remain committed to continued investment in growth-related initiatives and in geographies with continued growth potential,” said Michael McGarry, chairman and CEO, PPG.
Read More: PPG declares restructuring, aims $125 mn annual savings
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