Home >  Business

Tuesday, April 09, 2002

By Joyce Gannon, Post-Gazette Staff Writer

Last year's sluggish economy took its toll on profits at Pittsburgh's largest companies.

Of the top five public companies ranked according to net income, only No. 1 Mellon Financial saw net income gain over the prior year -- and that was because of a big, one-time gain from the sale of its branch operations. Pare away that gain and earnings from continuing operations dipped slightly.

	Mellon Financial BUSINESS: Financial services HEADQUARTERS: Downtown EMPLOYEES: 21,300 Alcoa BUSINESS: Aluminum production HEADQUARTERS: North Side EMPLOYEES: 129,000 H.J. Heinz BUSINESS: Food products HEADQUARTERS: Downtown EMPLOYEES: 45,800 PPG Industries Inc. BUSINESS: Glass, chemicals, coatings HEADQUARTERS: Downtown EMPLOYEES: 34,900 PNC Financial Services Group BUSINESS: Financial services HEADQUARTERS: Downtown EMPLOYEES: 24,200 Online Graphic: 2001 Net Income

The rest of the top five -- Alcoa, H.J. Heinz Co., PPG Industries and PNC Financial Services Group -- reported significant declines in income for 2001, primarily because of the recession.

The winner in the category, Mellon, reported net income for 2001 of $1.318 billion, up from $1 billion in 2000. It benefited largely from the fourth-quarter sale of its retail bank branches for $2 billion to Citizens Bank of Rhode Island. Since unloading the branches, Mellon has been focusing on repositioning itself as a provider of asset management services for institutions and wealthy, private clients.

PNC, with the fifth-highest net income among the Top 50, restated its 2001 profits twice, eventually settling on $377 million, down from $1.28 billion in 2000.

The first change, announced in January, involved slashing $155 million from 2001 earnings after federal regulators questioned the treatment of troubled loans PNC had moved off its balance sheet. The second adjustment occurred in February when PNC trimmed an additional $35 million from earnings because of a bookkeeping error in the sale of its home mortgage business to Washington Mutual.

Analysts said the changes shouldn't mar the bank's long-term reputation, but coming on the heels of Enron's financial collapse, they put PNC under increased scrutiny.

Alcoa, the runner-up in net income among the Top 50, reported a 39 percent decline in profits, to $908 million from $1.48 billion in 2000.

The drop-off reflected a depressed global economy, lower prices and weak demand for aluminum. Alcoa, which reported a fourth-quarter loss of $142 million, its first quarterly loss since 1994, also took a restructuring charge of $241 million for eliminating 6,500 jobs, or about 5 percent of its worldwide work force.

H.J. Heinz Co., which cut a couple thousand jobs last year as part of restructuring efforts, said net income dropped from $891 million to $478 million in 2001. Despite a record year for its ketchup sales including the new, brightly colored EZ Squirts, Heinz was coping with problems including declining pet food sales, high energy costs and marketing expenditures for new product launches.

PPG Industries has already begun paring its work force and shuttering plants to trim costs after its net income last year dropped by about a third to $387 million from $620 million in 2000. The glass, paint and chemicals company was mainly hurt by the nationwide slowdown in manufacturing.

The company has already announced the closure of an automotive coatings plant near Detroit and is downsizing some coatings operations in Europe. More details about its restructuring -- which could include further cutbacks of PPG's worldwide work force of 34,900 -- will be disclosed later this month when the company reports its first-quarter earnings.