PPG Coatings

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Pierre-Marie De Leener, Executive Vice President PPG Capital Markets Day December 5, 2011 Business Updates Aerospace, Refinish and Protective & Marine Coatings Information current as of December 5, 2011
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Transcript of PPG Coatings

Page 1: PPG Coatings

Pierre-Marie De Leener, Executive Vice President

PPG Capital Markets DayDecember 5, 2011

Business Updates Aerospace, Refinish and Protective

& Marine Coatings

Information current as ofDecember 5, 2011

Page 2: PPG Coatings

Global businesses with heavy focus on technology, distribution and customer service

• Protective and Marine Coatings

• Aerospace

• Automotive Refinish

• Architectural Coatings Americas &

Asia/Pacific

(Overview by Rich Alexander)

Geographic Sales Mix

Aftermarket, ~80%

OEM / New, ~20%

U.S. & Canada, 49%

Europe, 21%

Asia/Pacific, 25%

Latin America, 5%

Emerging Regions = ~30%

Performance Coatings Business Units

Performance Coatings Segment

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Page 3: PPG Coatings

15.4% 15.3%

0%

5%

10%

15%

20%

$2,500

$2,750

$3,000

$3,250

$3,500

$3,750

$4,000

3Q08 3Q09 3Q10 3Q11

EB

IT M

arg

in

Sale

s

Sales Margin

3Q YTD Segment Financial Results

OEM / New, ~20%

Excellent financial performance continues, driven by large aftermarket presence

Performance Coatings Sales Mix

Aftermarket, ~80%

OEM / New, ~20%

Performance Coatings Segment

3

Millions of USD

Page 4: PPG Coatings

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

Other

Rail

Offshore

Power

Oil & Gas

Infrastructure

Marine Aftermarket

Marine OEM

Protective & Marine Coatings Industry

Varied industry end-use markets; Strong Asian profile (ship building)

Protective & Marine Coatings Industry ($B)

Source: Company Estimates

Eastern Europe & Mid-East

Asia Pacific

Latin America

Western Europe

U.S. & Canada

Industry Geographic Mix

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Page 5: PPG Coatings

PPG Protective & Marine Coatings

PPG equally split between protective and marine markets, strong technology requirements

50%

25%

25%

0%

25%

50%

75%

100%

ProtectiveCoatings

PPG Protective & Marine Coatings Sales Mix

MarineOEM

Marine Aftermarket

Premium and Standard Antifoulants

Ultra Durable TopcoatsTank Linings

Fire Protection

Technology-driven End-use Markets

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Page 6: PPG Coatings

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Protective & Marine Coatings Industry Statistics

Protective market growing; Marine OEM activity declining after strong build cycle

0%

2%

4%

6%

8%

10%

12%

0.00

0.40

0.80

1.20

1.60

2007 2008 2009 2010 2011E 2012P

Order B

acklog -% of Fleet

Deliveries

Deliveries Order Backlog

Container Ship DeliveriesTwenty-Foot Equivalent Units – (TEUm)

Sources: Clarkson Research Services, ABG Sundal Collier, Company Estimates

0

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014 2015

Developed Emerging

Global Infrastructure Spending

CAGR:U.S./W. Europe = 4%

Emerging Regions = 8%

Source: IHS Global Insights

Billions of USD

Page 7: PPG Coatings

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45%

55%

PPG Aerospace Sales Mix

Aftermarket

OEM

Global technology and service business; Equally split between OEM and aftermarket

• Leading technologies• Coatings

• Sealants

• Transparencies (aircraft windows)

• Services

• Global distribution

• Service

Business Success Factors

PPG Aerospace

Page 8: PPG Coatings

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Basecoat Clearcoat System

Solar Reflective System

Single Stage Topcoat

Non Chrome Exterior Primer

Non Chrome Flexible Primer

Non Chrome Structural Primer

Aerocron® Electrocoat

Sanding Surfacers

PPG Aerospace Leading Technologies

Extensive aerospace technology content

CoatingsLegend:

Page 9: PPG Coatings

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Basecoat Clearcoat System

Solar Reflective System

Single Stage Topcoat

Non Chrome Exterior Primer

Non Chrome Flexible Primer

Non Chrome Structural Primer

Aerocron® Electrocoat

Sanding Surfacers

Intelligent Windows

Complex Glass & Plastic Forming

Next Generation Surface Seal

Improved P-Static Coating

Opticor™ Advanced Transparency Material

Alteos™ Interactive Window Systems

PPG Aerospace Leading Technologies

Extensive aerospace technology content

CoatingsLegend: Transparencies

Page 10: PPG Coatings

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Basecoat Clearcoat System

Solar Reflective System

Single Stage Topcoat

Non Chrome Exterior Primer

Non Chrome Flexible Primer

Non Chrome Structural Primer

Aerocron® Electrocoat

Sanding Surfacers

Intelligent Windows

Complex Glass & Plastic Forming

Next Generation Surface Seal

Improved P-Static Coating

Opticor™ Advanced Transparency Material

Alteos™ Interactive Window Systems

Lightweight Sealants

Spray Seal

Cure on Demand Sealant

Non Chrome Corrosion Inhibitive SealantLightweight Conductive Sealant

Customized Sealant Solutions

PPG Aerospace Leading Technologies

Extensive aerospace technology content

CoatingsLegend: Transparencies Sealants

Page 11: PPG Coatings

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PPG Aerospace Distribution & Service

ASC’s provide high degree of customer service in close proximity to customer locations

PPG Application Support Center (ASC) Network

Page 12: PPG Coatings

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0

250

500

750

1,000

1,250

2007 2008 2009 2010 2011E 2012P

Boeing/Airbus Jet Deliveries

Source: Boeing / Airbus & UBS Estimates

+6%

+14%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2008 2009 2010 2011E 2012P

U.S. / W. Europe Emerging Regions

Global Airplane Fleet(Aerospace Aftermarket)

2011 – 2012 CAGR:U.S./W. Europe = 4%

Emerging Regions = 6%

# of Aircraft

Aerospace industry expected to continue strong growth trends in both OEM and aftermarket

Aerospace Industry

# of Aircraft

Page 13: PPG Coatings

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Refinish industry has broad geographic split; Several large global competitors

Eastern Europe & Mid-East

Asia Pacific

Latin America

Western Europe

U.S. & Canada

Industry Geographic Mix(CAGR = 2% - 4%)

Emerging regions approaching

40% of industrySource: Company Estimates

PPGLocal Competitors

Global Global Global Global Competitor Competitor Competitor Competitor

#2#2#2#2

Global Global Global Global Competitors Competitors Competitors Competitors #3, 4 & 5#3, 4 & 5#3, 4 & 5#3, 4 & 5

Refinish Competitive Landscape

Competitive set varies by region

Refinish Coatings Industry

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Global leader with broad global footprint; Distribution, technology & service key PPG attributes

Asia Pacific

Latin America

Europe

U.S. & Canada

PPG Refinish Geographic Mix

Solid growth in emerging regions

with further opportunities

• Distribution & service• Differentiated network

• Leading technologies• Water-based coatings

• Color

•Global presence

Business Success Factors

PPG Refinish

Page 15: PPG Coatings

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Collision Repair End-use Mix

Collision Commercial & LICCommercial/Fleet & Light Industrial Coatings (LIC)

PPG Refinish

Page 16: PPG Coatings

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11 PPG manufacturing facilities

Distributors >5,500

North America

Asia / Pacific

Latin America

EuropeBody Shops >100,000

North AmericaAsia /

Pacific

Latin America

Europe

PPG differentiated two-step distribution model provides for high customer service levels

PPG Refinish Coatings Distribution Model

Page 17: PPG Coatings

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Color critical to customers; PPG leading color tools to aid in body shop productivity

• Sprayed out Variant Chips • Computerized Mixing Systems• TouchMix®

• RapidMatch® Variant Selector

U.S. multi-brand distributor survey feedback(5 high – 1 low)

Color matchQuality/durabilityProduct availability

Ease of useTM service

Brand

TrainingDiscountsNet costs

Source: Independent Consultant Study

Refinish Customer Desired Criteria PPG Color Tools

1.0

2.0

3.0

4.0

5.0

Top 3 Criteria Middle 3 Criteria Bottom 3 Criteria

PPG Competitor Avg.

PPG Refinish Color

Page 18: PPG Coatings

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Global leader in refinish water-based customer adoption; Rapid shift to new, premium technology aided by product performance

2010

13%

87%Water

Solvent

2005

30%

70%

22% CAGR

Key Water Advantages:Environmental considerations

Ease of use / Productivity tools

Color consistency / OEM alignment

PPG Refinish New Technology Adoption

Page 19: PPG Coatings

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Market Segment Brands Comments

Premium

Premium products markets

more prevalent in developedregions

Mid-Tier / Value

Mid-Tier / Value markets

more prevalent in emergingregions

Distinguished brands to address varied market segments

PPG Brands:

PPG Refinish Brand Strategy

Page 20: PPG Coatings

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Strong global presence; solid penetration with further opportunities in emerging regions

Source: Company Estimates

PPG Geographic Profile

PPG Refinish

Page 21: PPG Coatings

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Emerging regions shifting toward developed model; Growth in global automotive fleet

Source: IHS Global Insights

# of Vehicles

MarketDriver

DevelopedRegions

ImpactEmergingRegions

Impact

Car Parc + +Accident Rates = +Miles Driven = +Technology

ValueHigh +

CurrentlyLow/Mid +

InsuranceInfluence

High +Currently

Low -

Current Industry Trends

0

100,000

200,000

300,000

400,000

500,000

600,000

2009 2010 2011E 2012P 2013P

U.S. / W. Europe Emerging Regions

Global Automotive Fleet(Refinish Aftermarket)

2011 – 2012 CAGR:U.S./W. Europe = 1%

Emerging Regions = 6%

Refinish Industry

Source: Company Estimates

Page 22: PPG Coatings

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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)

Summary

Page 23: PPG Coatings

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Forward-Looking StatementsStatements contained herein relating to matters that are not historical facts are forward-looking statementsreflecting PPG’s current view with respect to future events and financial performance. These matters within themeaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Actof 1934, as amended, involve risks and uncertainties that may affect PPG’s operations, as discussed in PPG’s filingswith the Securities and Exchange Commission pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, andthe rules and regulations promulgated thereunder. Accordingly, many factors could cause actual results to differmaterially 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 availabilityof raw materials, the ability to maintain favorable supplier relationships and arrangements, difficulties in integratingacquired businesses and achieving expected synergies therefrom, economic and political conditions in internationalmarkets, the ability to penetrate existing, developing and emerging foreign and domestic markets, foreign exchangerates and fluctuations in such rates, fluctuations in tax rates, the impact of future legislation, the impact ofenvironmental regulations, unexpected business disruptions, and the unpredictability of existing and possiblefuture litigation, including litigation that could result if the asbestos settlement discussed in PPG’s filings with theSecurities and Exchange Commission does not become effective. However, it is not possible to predict or identifyall such factors. Consequently, while the list of factors presented here and in PPG’s Form 10-K for the year endedDecember 31, 2010 are considered representative, no such list should be considered to be a complete statement ofall potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realizationof forward-looking statements. Consequences of material differences in results compared with those anticipated inthe 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 onPPG’s consolidated financial condition, results of operations or liquidity. All information in this presentation speaksonly as of December 5, 2011, and any distribution of this presentation after that date is not intended and will not beconstrued as updating or confirming such information. PPG undertakes no obligation to update any forward-lookingstatement.

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