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An In-Depth Look into PPG Industries’ Glass Segment

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Sep. 2 2016, Published 7:17 a.m. ET

Glass segment

PPG Industries’ (PPG) glass segment is the company’s lowest revenue generator. According to the company’s 2015 annual report, the segment contributed 7%, or $1.1 billion, of PPG’s total revenue.

In 2010, the segment reported revenue of $985 million. This implies a CAGR (compound annual growth rate) of ~2.3% in the past five years. The revenue stream for this segment includes flat glass and fiberglass.

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PPG’s business model

PPG’s glass segment caters its products to commercial and residential construction, wind energy, energy infrastructure, transportation, and electronics industries. PPG Industries is engaged in a strategic partnership with Nan Ya Plastics to supply products to the electronics industry in Asia.

The segment’s glass products are sold directly to manufacturing companies. PPG’s competitors in this segment include Owens Corning (OC), which reported revenue of $5.4 billion in 2015, Johns Manville, CPIC Fiberglass, and Taishan Fiberglass.

Recent developments in the glass segment

PPG, in a strategic move to focus on its paints and coatings segment, has divested its non-core business. In 2Q16, it announced the sale of its flat glass business to Vitro for $750 million. It also announced the sale of its European fiberglass business. Now, its glass segment will include only its US fiberglass business. The deal is expected to be completed by the end of 2016.

With this sale agreement, PPG Industries’ overall revenue will have a negative impact. It’s also expected that the glass segment will now represent only 2% of PPG Industries’ total revenue.

You can indirectly hold PPG Industries by investing in the ProShares S&P 500 Dividend Aristocrats (NOBL), which held 2.0% of its portfolio in PPG Industries as of August 26, 2016. The top holdings of NOBL include 3M (MMM) and Air Products & Chemicals (APD), with weights of 2% and 2.1%, respectively.

In the next part, we’ll look at PPG Industries’ geographical mix.

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