The Sherwin-Williams Company reported fourth-quarter 2009 net income of $65.3 million, a 30% increase from the fourth quarter of 2008. Sales for the quarter fell 5.9%, to $1.59 billion.
For 2009 as a whole, net income was $435.8 million, a 9% decrease from 2008. Sales for the year fell 11%, to $7.09 billion.
The company said the decrease in sales for the quarter and year were due primarily to weak paint-sales volume. Acquisitions were not a significant factor in the sales results.
Commenting on the results for the year, Chairman and CEO Christopher M. Connor said the company was “disappointed” that sales and earnings fell short of the previous year. He added, however, that the company is “encouraged by our earnings performance in the last half of the year, resulting primarily from the appropriate steps taken by our operating segments to control costs and improve efficiencies.”
Connor said the company is “beginning to see some stability in our sales to certain market segments, although demand in most end markets remains weak, and industry-wide volume is down significantly from peak levels achieved a few years ago.”
For the company’s Paint Stores Group, sales declined 11.4% in the fourth quarter from the previous year, to $920.2 million, and fell 12.9% for the year, to $4.21 billion, with the decreases due primarily to lower paint sales volume. The segment’s profit rose 5.9% in the quarter, however, to $119.9 million, while the group’s profit for the year declined 7.4%, to $600.2 million.
For the company’s Consumer Group, sales declined 2.2% in the fourth quarter, to $240.1 million, and fell 3.7%, to $1.23 billion, for the year compared to 2008. Segment profit for the quarter was $4.6 million, down from $12.3 million in 2008. Segment profit for the year rose 12.2%, to $157.4 million. The improved earnings for the year were primarily the result of cost controls, lower asset-impairment charges, and lower transportation and other distribution charges, the company said.
For the Global Finishes Group, sales rose 5.5%, to $437.1 million, for the fourth quarter, while sales for the year declined 11.4%, to $1.65 billion. Sales for the quarter benefited from favorable currency translations, the company said. The segment recorded a net loss of $1.1 million for the quarter, compared to profit of $15.8 million in the prior-year period, with the loss due primarily to asset-impairment charges and a loss on the dissolution of a European subsidiary. For the year, the segment’s profit declined 57.4%, to $65 million, due primarily to reduced sales volume, asset-impairment charges, and the dissolution of the subsidiary. The company recorded a fourth-quarter pretax loss of $21.9 million as a result of the subsidiary dissolution, and said it has restructured its other European businesses “to better serve our customers, improve operating efficiency in the region, and better utilize our remaining European assets.”
Connor said the company in 2009 cut costs related to sales, general, and administrative operations by nearly $109 million from 2008. At the same time the company added 53 new paint stores while closing 45 “redundant” stores, finishing the year with a total of 3,354 stores in operation.
Outlook for 2010
Commenting on prospects for 2010, Connor said first-quarter sales are expected to be flat or slightly down compared to 2009, with earnings per share anticipated to be in the range of $.30 to $.40, compared to $.32 per share in the first quarter of 2009. For 2010 as a whole, the company is forecasting sales growth in the “low- to mid-single-digit” percentage range. Based on sales at that level, the company is forecasting 2010 earnings per share in the range of $4.05 to $4.45 per share, compared to the $3.78 per share reported for 2009.
“We anticipate that the stabilization we are beginning to experience in some segments of the U.S. and global economies will continue, although not at a sufficient pace to offset continued softness in many other areas of the global economy,” Connor said.