Auto Presentation Finalprint

of 45 /45
PPG Industries, Inc. 1 Automotive OEM Coatings Bill Wulfsohn Sr. VP, Industrial Segment February 23, 2010 Tim Knavish VP, Automotive Coatings - Americas

Embed Size (px)

Transcript of Auto Presentation Finalprint

Automotive OEM CoatingsBill Wulfsohn Sr. VP, Industrial Segment Tim Knavish VP, Automotive Coatings - AmericasFebruary 23, 2010

PPG Industries, Inc. 1

Core ThemesAt $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 significant growth opportunities

February 23, 2010

PPG Industries, Inc. 2

Coatings IndustryGlobal Coatings = $87BGlobal Coatings by Region Global Coatings by Mix

Others 11%

North America 24%Special Purpose 49% Arch 51%

Aero 5% Pkg 6% Auto OEM 9% GI 44% Refinish 18%

Asia Pacific 35% Europe 30%

M&P 18%

Automotive Coatings is a $4B - $6B marketSource: Orr & Boss February 23, 2010 PPG Industries, Inc. 3

Automotive Coatings IndustryGlobal Coatings = $4B - $6BGlobal Coatings by RegionSouth 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, Inc. 4

Automotive Coatings IndustryBusiness OverviewPretreatment Electrocoat Primer Basecoat Clearcoat

Excluding Japan and Adjacencies

Core LayersPretreatment Electrocoat Primer Surfacer Basecoat ClearcoatSource: PPG Estimate

DescriptionConversion coating that improves corrosion resistance and paint adhesion Electrically deposited coating that protects metal from corrosion Spray applied coating that improves surface smoothness, durability and protects against chip Color coat that adds the decorative chroma and aesthetic effects Final coating layer that provides protection and shine to the vehicle to maintain its showroom like finishFebruary 23, 2010

Size (MM)$150 $900 $500 $1,750 $750PPG Industries, Inc. 5

PPG Automotive CoatingsOEM Process

Movie Clip

February 23, 2010

PPG Industries, Inc. 6

PPG Automotive Coatings2009 PPG Coatings Sales = $9B

Auto OEM

Automotive Coatings Is Core to PPGs Portfolio

February 23, 2010

PPG Industries, Inc. 7

PPG Competitive AdvantagesStrong 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

Strong market positions..

PPG Industries, Inc. 9

Automotive Coatings IndustryCompetitive LandscapeNorth AmericaOther Other PPG DuPont PPG DuPont

Europe

BASF

BASF

Asia PacificOther KCC BASF Nippon DuPont PPG

South America

Other

PPG

BASF DuPont Kansai

Ex - Japan

Source: PPG Estimates

February 23, 2010

PPG Industries, Inc. 10

Automotive Coatings IndustryCompetitive LandscapeNorth AmericaOther Other PPG DuPont PPG DuPont

Europe

BASF

BASF

Asia PacificOther KCC BASF Nippon DuPont Nippon PPG

ChinaOther KCC PPG

South America

Other

PPG

BASF Kansai Kansai DuPont Ex - Japan

BASF DuPont

Strong Market Position in All RegionsSource: PPG Estimates February 23, 2010 PPG Industries, Inc. 11

Automotive Coatings IndustryIndustry Sales by LayerPT Clear E-Coat Clear E-Coat

PPG Sales by LayerPT

Primer Base

Base Primer

Strong Position in All Layers

Source: PPG Estimates

February 23, 2010

PPG Industries, Inc. 12

Automotive Coatings IndustryCustomer BaseNorth American Based European Based

PPG Other Other

PPG

Japanese / Korean Based in NA

Chinese / Indian Domestics

PPG Other Other

PPG

Broad Mix of CustomersSource: PPG Estimates February 23, 2010 PPG Industries, Inc. 13

History of investment in capabilities and technology leadership

PPG Industries, Inc. 14

PPG Automotive CoatingsPPG Structure1975

1980

1985

1990

1995

2000

2005

2010

PPG Innovations

Continuous Strategic Investment and InnovationFebruary 23, 2010 PPG Industries, Inc. 15

PPG Automotive CoatingsResearch & DevelopmentPPG has been awarded an R&D 100 Award 9 times in the last 14 yearsPresented 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 years resulting in 6 awards 41 percent of Automotive OEMs sales are from products that are five or fewer years old

February 23, 2010

PPG Industries, Inc. 16

Well Positioned Joint Ventures

PPG Industries, Inc. 17

Joint VenturesPKAF Asian PPG PPG Helios

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

Scope Alliance with Kansai Paints Formed in 2004 Target Japanese OEMs in

Scope JV with Asian Paints Formed in 1997 Support growing Indian

Scope JV with HeliosPaint Formed in 2000 Provide sales and service to

North America and Europe

transportation markets

Russian Domestic and Eastern Europe OEMs

February 23, 2010

PPG Industries, Inc. 18

Historical Performance

PPG Industries, Inc. 19

PPG Automotive CoatingsHistorical PerformanceGlobal Builds70 60 50MM Builds

PPG SalesNA EMEA AP SA

NA

EMEA

AP

SA

40 30 20 10 0 2005 2006 2007 2008 2005 2006 2007 2008

PPG Growth Outperforms the MarketSource: CSM Worldwide February 23, 2010 PPG Industries, Inc. 20

Automotive CoatingsGlobal Chaos

Brazil auto sales fall sharply in OctoberFebruary 23, 2010 PPG Industries, Inc. 21

PPG Automotive Coatings2009 Dynamics16 14 12 10 8 6 4 2 02007

2007-2009 North America Builds

MM Builds

Builds

Clunkers

Other

2009

EMEA Builds25 20MM Builds

Asia BuildsExcluding Japan

SalesMM Builds

25 20 15 10 5

15 10 5 0 2005 2006 2007Europe Other

2008

2009

0 2005China

2006India

2007Australia

2008Korea Other

2009

Source: CSM Worldwide

February 23, 2010

PPG Industries, Inc. 22

Aggressive Response to Restore Profitability

PPG Industries, Inc. 23

PPG Automotive CoatingsAggressive Cost and Business MeasuresRestructuring Actions

Manufacturing RationalizationFacilityClarkson, Ontario Baton Rouge, LA Saultan, FR European Mfg Satellites (3) North America Mfg Global Tech Labs Sales and Admin

Overhead Reduction

ActionClosed Closed Exited Paint Mfg Headcount Reduction Closed Headcount Reduction Footprint Reduction Headcount Reduction

20%

2008

2009

Lean and Cost FocusKey ProjectsLocalization of resins and products Logistics Efficiencies Receivable past due reduction 5S system for waste elimination Material Utilization Optimization: Yield loss, Sample expense, Inventory loss

Global Build Breakeven ReductionTiming2010 2010 2010 Ongoing 2010

15%

February 23, 2010

PPG Industries, Inc. 24

PPG Automotive Coatings100 80 60 40$ MM

Industrial Coatings Segment Earnings Improvement

20 0 -20 -40 -60 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

Aggressive Restructuring Drives Profit ImprovementFebruary 23, 2010 PPG Industries, Inc. 25

Automotive CoatingsRebound Build ForecastExcluding Japan

10% Growth CAGR

China's auto sales hit record high in JanuaryMM Builds

60 50 40 30 20 10 02009

NA

EMEA

AP

SA

2010

2011

2012

Source: PPG

February 23, 2010

Source: CSM Worldwide 26 PPG Industries, Inc.

Looking ForwardLeverage market demand growth with strong focus on the BRIC countries Sustain profitability with content growth, cost reduction, pricing discipline and new valueadded technology

February 23, 2010

PPG Industries, Inc. 27

Industry OutlookNorth America: Demand Recovery16 14 12 10 8 6 4 2 0 2007 2009 2011 2013 45 40 35 30 25 20 15 10 5 0 2007 2009 2011 2013

EMEA: Sub-Region ShiftW. Europe Other

Builds MM

Builds MM

Asia: Sustained Growth30 25Builds MM

SA: Incremental Growth6ChinaBuilds MM

India Korea

20 15 10 5 0 2007 2009 2011 2013

5 4 3 2 1 0 2007 2009 2011 2013PPG Industries, Inc. 28

Excluding Japan

Source: CSM Worldwide

February 23, 2010

Leverage Growth in BRIC

PPG Industries, Inc. 29

Accelerate Growth in Asia14 12 10 8 6 4 2 0 2004 2006 2008 2010 2012 2014E-coat WaterborneLargest Supplier in China

MM

China Builds Impact

Asia Capacity ExpansionTechnology Action Plan Timing

Solventborne

Wuhu Phase II Add WB Capability in Tianjin New ZHG Plant

2010

2010 2011

India BuildsBuilds MM#2 Supplier

Asian PPG New Sriperumbudur facility Integration of Farber acquisition Eight primary OEM customers Recent Awards: Tata Pune VW Pune Ford Chennai GM - TalegaonFebruary 23, 2010 PPG Industries, Inc. 30

5 4 3 2 1 0 2009Source: CSM Worldwide

2010

2011

2012

Automotive Coatings Industry Over 80 OEMs PPG is fully owned Global OEMs require Chinese partner (max 50% ownership)

Asia Pacific Perspective: ChinaToyota Chandchun II Hyundai Shunyi III BAIC BDA Hafei Auto FAW-VW

New plants announced to be built between 2010 and 2014Beijing-Hyundai FAW Tianjin SGM-Dong Yue BYD Xian II R/Nissan Zhengzhou II Ford Chingqing II BBDC Chery

Changcheng Greatwall SGM Beisheng Auto NJ-Iveco Anhui Jianghuai

NJ-Fiat

Shanghai Auto Shanghai GM Honda Wuhan II Shanghai VW Proton Hangzhou PSA Wuhan III R/Nissan Xiaogan SAIC-GM-Wuling PSA Chenzhen BYD Auto Nissan Southeast Fujian Daimler GEELY DongFeng-Peugeot-Citron

Top 20 Customers New OEM plants

BYD Changsha Zotye Changsha

Note: Map is a sample of OEM plants

February 23, 2010

PPG Industries, Inc. 31

Automotive Coatings IndustryAsia Pacific Perspective: IndiaTata Maruti Suzuki Honda Honda Force Motors Man Force Tata ULCC

Top APPG Customers New OEM plants

15 new plants announced to be built between 2009 and 2014GM ` Tata

Mahindra Renault Mahindra Tata GM Bajaj Renault Bajaj Tata Fiat VW Mercedes Mahindra Toyota Ashok Leyland Ford Nissan Renault Hyundai Motor Ford

Daimler Hero

Nissan Ashok Leyland

India Will Become a Leading Exporter of Vehicles Industries, Inc. 32 February 23, 2010 PPG

Automotive Coatings IndustryEmerging Regions Driving Growth in Small and Midsize Segments2007 2010 20142007 vs. 2014 Builds

37% 34% 29%Source: CSM Worldwide Large Vehicle

30% 41% 29%Mid Size Vehicle Small Vehicle

40% 29% 31%

Small Medium Large

+7.8 MM +6.2 MM +0.6 MM

PPG Maintains Content Per VehiclePretreatment Electrocoat Primer Basecoat Clearcoat Products Pretreatment Electrocoat Primer Basecoat Clearcoat PPG DuPont BASF Henkel X X X X X X X X X X X X X X

February 23, 2010

PPG Industries, Inc. 33

Automotive Coatings IndustryEmerging Regions Driving Growth in Small and Midsize Segments2007 2010 20142007 vs. 2014 Builds

37% 34% 29%Source: CSM Worldwide Large Vehicle

30% 41% 29%Mid Size Vehicle Small Vehicle

40% 29% 31%

Small Medium Large

+7.8 MM +6.2 MM +0.6 MM

Sealants Services DurabedSprayable Bedliner Specialty Products

PPG Maintains Content Per VehicleProducts Pretreatment Electrocoat Primer Basecoat PPG DuPont BASF Henkel X X X X X X X X X X X X X X X X X X X X X X PPG Industries, Inc. 34 X

Adhesives

Clearcoat Acoustic Sealants Bedliner

AudioguardAcoustic Coatings Systems

Services Specialties February 23, 2010

PPG Automotive CoatingsSustain Profitability Drivers Actions

February 23, 2010

PPG Industries, Inc. 35

PPG Automotive CoatingsSustain Profitability Drivers Actions

February 23, 2010

PPG Industries, Inc. 36

Automotive Market TrendsEnvironmental Eco-efficiency to improve resource use Vehicle interior emissions Resource availability Product positioning based on Green

Energy Move to fuel efficient platform designs, conservation approaches Shift in vehicle segment sales Local production Alternative fuel sources

Technology Political / Commerce Government mandates, regulation Government involvement in car cos Cost to supply globally Rise of China and India IP Protection Technology transfer Demographics Light weight materials Nano technology New processes and designs

Builds growth in the emerging regions

Urbanization movement Consistent quality standards Personal customization, convenienceFebruary 23, 2010 PPG Industries, Inc. 37

Sustain profitability with

PPG Industries, Inc. 38

PPG Automotive CoatingsNew Product Technology 2010 - 2014Pretreatment Electrocoat Primer Basecoat Clearcoat Compact Process ZircoBond 2 High Throw ED7000 / Dura-Prime Waterborne OPP3e / OPP4 Next Gen Topcoat System Increased Scratch Resistance / Self Healing Clear / UV Cure Clear B1:B2 & 3C1B: Solventborne & Waterborne

Market DriversEnergy Cost / Durability / Environment Appearance / Chip / Environment Cost / Energy / Appearance Appearance / Environmental Energy

February 23, 2010

PPG Industries, Inc. 39

Automotive Coatings IndustryIndustry TrendsConventional Process

E-Coat

Rinse Cycle

Cool

Bake

Primer

Sealer + Gel Bake

Sanding

Sanding

Basecoat Booth

Inspection

Cool

Bake

Clearcoat

Pick-Up

February 23, 2010

PPG Industries, Inc. 40

Cool

Clean, Pretreated Body-in-White

Bake

Automotive Coatings IndustryIndustry TrendsConventional Process

Compact Process

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 exampleFebruary 23, 2010 PPG Industries, Inc. 41

Cool

Clean, Pretreated Body-in-White

Bake

PPG Automotive CoatingsIndustry TrendsCompact Process Impact Customer Cost Model$255 / unit Customer Value: Reduced Footprint Reduced Capital Less Paint Usage PPG Value Differentiated Coatings Technology Driven $227 / unitIndirect Mat'l Energy Labor Capital Paint

Conventional

Compact Process

Compact Process Generates $28 / unit SavingsSource: PPG Estimate February 23, 2010 PPG Industries, Inc. 42

Strategic SummaryAt $4B - $6B, Automotive Coatings is a key coatings segment PPG has broad strength and balance within the Automotive industryStrong global presence utilizing technology with a healthy mix of customers

PPG has a long history of aggressive actions driving profitable growth and successful leadershipTough restructuring actions combined with an energized focus on Joint Ventures Proven sustainability through investment in capabilities and technology

PPG has clear strategies to capitalize on significant growth opportunitiesLeverage growth in BRIC countries Mitigate margin pressure with content growth, cost reductions, pricing discipline and technology

February 23, 2010

PPG Industries, Inc. 43

PPG Automotive CoatingsRecent 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 ProcessFebruary 23, 2010 PPG Industries, Inc. 44

ForwardForward-Looking StatementStatements 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, the realization of anticipated cost savings from restructuring initiatives, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, which also depends on economic and political conditions, foreign exchange rates and fluctuations in such rates, 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 is 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 February 23, 2010, 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.February 23, 2010 PPG Industries, Inc. 45