By Vallari Srivastava
(Reuters) -PPG Industries will lay off 1,800 employees in the U.S. and Europe and close plants as part of a cost-reduction program, the paints and coatings maker said on Thursday.
The program focused on reducing structural costs in Europe and in certain other global businesses, along with other corporate expenses following recent agreements to sell two of its businesses, the company said.
The company, which missed Wall Street estimates for third-quarter profit on Wednesday, also announced the sale of its architectural coatings business in the U.S. and Canada to buyout firm American Industrial Partners for about $550 million.
The sale makes sense as the business represents only 10% of PPG's consolidated revenue and has lagged most other end-markets in recent years, Morningstar analyst Spencer Liberman said.
He expects the sale proceeds will help fuel additional share repurchases.
PPG's architectural coatings business houses brands such as Dulux, Glidden, Olympic and Liquid Nails. It expects the deal to close in late 2024 or early 2025.
In August, the company had said it would sell its silica products business to Polish chemical company Qemetica for $310 million. The sale is expected to close in the last quarter of 2024.
"(Decision to cut jobs) are necessary to adjust our fixed cost base and to right-size our company following these two business divestitures," CEO Tim Knavish said in a statement.
Both the deals followed strategic reviews announced earlier this year.
PPG expects annualized pre-tax savings of about $175 million, including $60 million in 2025, once the cost-cut program is fully implemented.
The company said it would record a pre-tax charge of $250 million in the fourth quarter.