Consider it overspray from the deteriorating economy. Coatings manufacturer PPG Industries
The somber hue over such results is an unfortunately common one. With the auto and housing markets in the tank, upstream businesses are looking like graffiti vandals tagged them. Even Johnson Controls
These results are also not much different from what Sherwin-Williams
A thin veneer
According to the U.S. government, the domestic coating market is expected to contract 12% this year, and PPG saw evidence of that. Its industrial coatings segment -- which makes coatings for the automotive market -- fell 18% in the quarter. Its performance coatings segment was only able to post gains as a result of the SigmaKalon acquisition. Even where PPG was able to increase prices, performance was stripped because of lower volumes.
Management also didn't have many rosy colors available for 2009, with company Chairman Don Bunch saying that much of the first half of the year looked bleak: "Our early read on 2009 is that the first quarter and possibly the first half of the year is shaping up to be an even greater challenge than the fourth quarter 2008 due to further weakening demand."
A dash of cadmium yellow
Although not all of PPG's palette contains colors out of Picasso's blue period -- after all, it ended the year with $1 billion in the bank and increased its dividend back in October -- the coatings specialist is striving to conserve cash.
There's no hint the dividend's not safe now, but its pension plan obligations are underfunded, and it expects that as a result of poor investment returns, it will have to make payments in 2009 that are well in excess of the $50 million in payments it made in 2008. The analysts at Credit Suisse figure pension costs will more than double this year, but management says there's no problem, as it has plenty of cash on hand.
Matte or gloss finish?
With PPG, Sherwin-Williams, and even Valspar
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Fool contributor Rich Duprey owns shares of Wal-Mart, but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.