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PPG‘s board of directors has 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.
"Because of continued slow overall growth in global demand, we are taking decisive action to adjust our cost structure,” said Michael H McGarry, PPG Chairman and CEO. "These measures will better align our resources with anticipated on-going 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.”
PPG will record a pretax restructuring charge of US$190M to US$200M or US$0.53-US$0.58/diluted share, in Q4 2016, of which approximately US$140M represents cash costs and US$50M to US$60M is related to the write-down of certain assets and other non-cash costs. Of the approximately US$140M total cash outlay, about US$110MUsd is expected in 2017, with the balance to occur in 2018.
In addition to the aforementioned pretax charge and cash costs, approximately US$15M 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 US$120M to US$130M in annual savings, with US$40M to US$50M of savings projected to be realised in 2017 and the remainder of the expected annual savings to be substantially realised by year-end 2018.