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Aerospace, Refinish and Protective & Marine Coatings Pierre-Marie De Leener, Executive Vice President
Protective and Marine Coatings Aerospace Automotive Refinish Architectural Coatings Americas & Asia/Pacific (Overview by Rich Alexander)
25%
Aftermarket, ~80%
Europe, 21%
Global businesses with heavy focus on technology, distribution and customer service
2
$3,750
15.4%
15.3%
15%
$3,500
EBIT Margin Sales
$3,250
10%
$3,000
5%
$2,750
Aftermarket, ~80%
0%
Margin
Other Rail Offshore Power Oil & Gas Infrastructure Marine Aftermarket Marine OEM
Asia Pacific
Western Europe
Marine OEM
75%
25%
Marine Aftermarket
50%
25%
Tank Linings
25%
Protective Coatings
50%
0%
PPG equally split between protective and marine markets, strong technology requirements
5
1.60
12%
2,000 1.20
10%
1,500
Deliveries
8%
0.80
6%
1,000
4%
500
0.40
2%
0 2010
Billions of USD
Source: IHS Global Insights
0.00 2011 2012 2013 Emerging 2014 2015 2007 2008 2009 2010 2011E 2012P Deliveries Order Backlog Developed
0%
Protective market growing; Marine OEM activity declining after strong build cycle
6
PPG Aerospace
Business Success Factors PPG Aerospace Sales Mix
Leading technologies Coatings Sealants Transparencies (aircraft windows) Services Global distribution Service
Aftermarket
45% 55%
OEM
Global technology and service business; Equally split between OEM and aftermarket
7
Legend:
Coatings
Intelligent Windows
Sanding Surfacers
Opticor Advanced Transparency Material Single Stage Topcoat Non Chrome Structural Primer
Legend:
Coatings Transparencies
Spray Seal Solar Reflective System Improved P-Static Coating Sanding Surfacers Opticor Advanced Transparency Material Single Stage Topcoat Cure on Demand Sealant
Non Chrome Corrosion Inhibitive Sealant Lightweight Conductive Sealant Non Chrome Structural Primer Legend: Coatings Transparencies Sealants
ASCs provide high degree of customer service in close proximity to customer locations
11
Aerospace Industry
Boeing/Airbus Jet Deliveries
1,250
+14% +6%
1,000
750
8,000
500
6,000 4,000
250
2,000 0
2007 2008 2009 2010 2011E 2012P
# of Aircraft
0
# of Aircraft
2008
2009
2010
2011E 2012P
U.S. / W. Europe
Emerging Regions
Aerospace industry expected to continue strong growth trends in both OEM and aftermarket
12
Latin America
Asia Pacific
Local Competitors
PPG
Western Europe
Global Competitor #2
Refinish industry has broad geographic split; Several large global competitors
13
PPG Refinish
PPG Refinish Geographic Mix
Latin America
Asia Pacific
Europe
Global leader with broad global footprint; Distribution, technology & service key PPG attributes
14
PPG Refinish
Collision Repair
End-use Mix
Collision
15
Distributors >5,500
Latin America Asia / Pacific North America
Europe
Europe
PPG differentiated two-step distribution model provides for high customer service levels
16
PPG
Source: Independent Consultant Study
Competitor Avg.
Color critical to customers; PPG leading color tools to aid in body shop productivity
17
2010
87%
Water Solvent
70%
Key Water Advantages: Environmental considerations Ease of use / Productivity tools Color consistency / OEM alignment
Global leader in refinish water-based customer adoption; Rapid shift to new, premium technology aided by product performance
18
Mid-Tier / Value
PPG Refinish
PPG Geographic Profile
Strong global presence; solid penetration with further opportunities in emerging regions
20
Refinish Industry
Current Industry Trends
Market Driver
Car Parc Accident Rates Miles Driven
Technology
Developed Regions
Impact
Emerging Regions
+ = =
High
+ + +
Currently Low/Mid Currently Low
+ +
+ -
High
2010
2011E
2012P
2013P
U.S. / W. Europe
Source: Company Estimates Source: IHS Global Insights
Emerging Regions
Emerging regions shifting toward developed model; Growth in global automotive fleet
21
Summary
Industries: Multi-national coatings competitors, with some smaller local competition Technology, distribution and service are key success factors and present entry barriers PPG: Strong global businesses (#1 or #2 in each end-use market) with heavy aftermarket mix Leading technologies and distribution/service model Consistent earnings, with capability to counter raw material inflation with cost management and price Outlook: Lower Marine OEM builds Stable end-use markets (Refinish & Protective in developed regions, Marine aftermarket) Strong Aerospace industry growth, supplemented by PPG share gains (e.g., Boeing 787) Continued emerging regions growth (Refinish, Aerospace, Protective)
22
Forward-Looking Statements
Statements contained herein relating to matters that are not historical facts are forward-looking statements reflecting PPGs current view with respect to future events and financial performance. These matters within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, involve risks and uncertainties that may affect PPGs operations, as discussed in PPGs filings with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, and the rules and regulations promulgated thereunder. Accordingly, many factors could cause actual results to differ materially from the forward-looking statements contained herein. Such factors include global economic conditions, increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, difficulties in integrating acquired businesses and achieving expected synergies therefrom, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, foreign exchange rates and fluctuations in such rates, fluctuations in tax rates, the impact of future legislation, the impact of environmental regulations, unexpected business disruptions, and the unpredictability of existing and possible future litigation, including litigation that could result if the asbestos settlement discussed in PPGs filings with the Securities and Exchange Commission does not become effective. However, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here and in PPGs Form 10-K for the year ended December 31, 2010 are considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on PPGs consolidated financial condition, results of operations or liquidity. All information in this presentation speaks only as of December 5, 2011, and any distribution of this presentation after that date is not intended and will not be construed as updating or confirming such information. PPG undertakes no obligation to update any forward-looking statement. 23