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Sherwin-Williams Sales Up 9.6% in 2010

Wednesday, January 26, 2011

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Strong gains in Global Finishes, rebounding retail paint sales, and price increases powered the Sherwin-Williams Co. to a better-than-expected fourth quarter and year-end report.

Compared to the same periods in 2009, consolidated net sales increased $296.8 million, or 18.6%, to $1.90 billion for the fourth quarter and $682.2 million, or 9.6%, to $7.78 billion for the year ending Dec. 31, due primarily to higher paint sales volume, acquisitions, and selling price increases, the company said Tuesday (Jan. 25).

‘Bounced Off of the Bottom’

CEO Christopher M. ConnorCEO Christopher M. Connor was pleased with the results but expressed caution about the future, saying the “strength and sustainability” of the U.S. recession remained “in question.”


“I think we're going to look back on 2010 as a positive transition year for our company and the domestic paints and coatings industry as we bounced off of the bottom,” Connor said in a conference call discussion of the report.

He added:  “All three of our reportable segments grew sales organically in the year. Volume growth was modest but also positive across all segments—the first time in several years I've been able to say that.”

Acquisitions, Share Income

Acquisitions increased consolidated net sales 8.7% in the quarter and 3.4% in the year, the company reported. Currency translation rate changes increased consolidated net sales 0.4% in the quarter and 1.2% in the year.

Diluted net income per common share in the quarter increased to $.67 per share from $.58 per share in the fourth quarter 2009 and increased 11.4% to $4.21 per share in the year from $3.78 per share in 2009.

For the fourth quarter and year 2010, trademark and long-lived asset impairment charges related to a foreign operation reduced diluted net income per common share $.04 per share. Charges relating to costs to repurchase long-term debt reduced diluted net income per common share approximately $.04 per share in the quarter and $.12 per share in the year.

These charges were partially offset by the favorable impact related to the disposition of closed manufacturing sites during the fourth quarter of $.04 per share.

Global Finishes Group

The Global Finishes Group’s net sales (stated in U.S. dollars) increased 46.4% to $640.1 million in the quarter due primarily to acquisitions, higher paint sales volume, and selling price increases. Net sales increased 26.5% to $2.09 billion for the year, due primarily to acquisitions, higher paint sales volume, and favorable currency translation rate changes.

Segment profit in the quarter increased to $28.8 million from a loss of $1.1 million last year, due primarily to reduced asset impairment charges, increased paint sales volume, and selling price increases, partially offset by dilution from acquisitions. Segment profit increased in the year to $123.7 million from $65.0 million last year.

The Global Finishes Group includes Protective and Marine, Automotive and Chemical Coatings, as well as the Latin American market. The company does not release numbers for each division. The group distributes a wide range of products in more than 70 countries.

“In the Global Finishes Group, we continue to be pleased with the growth in architectural, OEM and automotive finishes sales volume,” Connor said. The acquisitions of Sayerlack and Acroma “had a negative impact” on the year’s financial results, but the acquisitions themselves “are performing to expectations,” he said.

Paint Stores Group

Net sales in the Paint Stores Group increased 8.6% to $999.3 million in the quarter and increased 4.1% to $4.38 billion in the year, due primarily to selling price increases and improving domestic architectural paint sales. Segment profit increased to $134.8 million in the quarter from $119.9 million last year and to $619.6 million for the year from $600.2 million last year.

Segment profit as a percent to net sales increased in the quarter to 13.5% from 13.0% last year and decreased in the year to 14.1% from 14.3% in 2009.

In 2010, the company added 49 new stores and closed 13 redundant stores, finishing the year with 3,390 stores in operation.

Consumer Group

Net sales of the Consumer Group increased 6.2% to $255.0 million for the quarter and 5.9% to $1.30 billion for the year, due primarily to improving demand by some retail, industrial and institutional customers. Segment profit increased to $26.1 million in the quarter from $4.6 million last year and to $204.0 million in the year from $157.4 million last year.

The company acquired 1.53 million shares of its common stock through open-market purchases in the quarter, bringing the year’s total purchase to 5 million shares. The company had remaining authorization on Dec. 31 to purchase 5.75 million shares.

Cautious Optimism

O’Connor said the company was “cautiously optimistic about the stability of end market demand” and was “working hard to mitigate the effect of rising raw material costs.”

He added: “If 2010 did mark the end of the four-year slide in domestic coatings industry volume, we believe that recovery from here is likely to be slow and erratic.”

Founded in 1866, The Sherwin-Williams Company manufactures, develops, distributes and sells   coatings and related products to professional, industrial, commercial, and retail customers. The company’s brands include Sherwin-Williams, Dutch Boy, Krylon, Minwax and Thompson’s Water Seal.


Tagged categories: Coatings manufacturers; Earnings reports; Economy; Finance; Protective coatings; Sherwin-Williams

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