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Sherwin-Williams’ Stores Paint Q2 Green

Thursday, July 19, 2012

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Sherwin-Williams’ Paint Stores, Global Finishes and higher prices helped deliver record sales and share prices in the second quarter and first half of 2012, the company reported Thursday (July 19).

Consolidated net sales increased by 9.3%, to a record $2.57 billion, in the quarter ending June 30 and climbed 11.9% to a record $4.71 billion for the first six months of the year, the Cleveland paint and coatings maker reported. 

Diluted net income per common share increased by 30.7% to a record $2.17 per share in the quarter and by 36.7% to a record $3.13 per share in six months, the company said.

‘We are Pleased’

“We are pleased to report record sales and earnings per share in the second quarter and first half of 2012 on the continued positive sales volume and strong operating results of our Paint Stores, Consumer and Global Finishes Groups,” said chairman and CEO Christopher M. Connor.

Photos: Sherwin-Williams Annual Report 2011

The Paint Stores Group was all smiles over its double-digit gains in the first half of the year. Net sales in the Global Finishes Group, which includes protective and marine coatings, rose nearly 7% in the first half.

As at other companies, unfavorable currency exchange rates eroded sales figures, by 2.5% in the quarter and 2.0% over six months.

Raw materials costs also continued to squeeze profits, but higher selling prices are finally “gaining traction” to offset them, the company said.

Global Finishes Shine

“Our Global Finishes Group improved paint sales volume and operating results in an increasingly difficult global environment,” Sherwin-Williams reported.
 
Protective and Marine Coatings joined OEM product finishes and automotive coatings in boosting net sales in the Global Finishes Group by 3.3% (to $498.7 million) in the quarter and by 6.9% (to $981.8 million) in the first six months of the year, the company said. The gains came from price increases, acquisitions and higher paint sales volume.

Acquisitions increased net sales by about 3.8% in the quarter and over six months, while currency rates depressed net sales by 5.4% in the quarter and 3.9% over six months.

Segment profit increased in the quarter to $48.0 million from $30.2 million from the year-ago period and to $76.7 million from $49.7 million from the first half of last year.

Paint Stores Pour It On

Net sales in the Paint Stores Group rose by a standout 14.6% to $1.49 billion in the quarter and by 17.2% to $2.61 billion in six months, driven by both higher sales volume in all end markets and by selling price increases.

Net sales from stores open for more than 12 months increased by 13.9% in the quarter and by 16.6% in the first half over last year’s comparable periods. Segment profit increased by $60.4 million, to $267.0 million, for the second quarter and by $104.2 million, to $379.7 million for the first half of the year.

The group opened 20 net new locations in the first half of the year and plans to open 60 to 65 in all for 2012.

Other Segments

Net sales of the Consumer Group (which includes Dutch Boy, Pratt & Lambert, and other retail brands) increased by 5.9% to $397.7 million in the quarter and by 7.1% to $718.1 million in the first half. The company credited “disciplined cost control and selling price increases” for the improvement.

Sherwin-Williams also recently completed the acquisition of Geocel Corp., a leading provider of sealants and adhesives.

Weakening exchange rates dampened the fortunes of the Latin America Coatings Group, where net sales decreased 4.5% to $187.3 million in the quarter. Six-month net sales increased by 1.2%.

The Latin America Coatings Group “is managing to minimize the unfavorable effects of currency and the softening demand in their end markets,” the company said.

Sunny Outlook

Connor said the company expected increases in the mid-single digits for the third quarter. He forecast diluted net income per common share at $2.05 to $2.20 in the third quarter, compared with $1.71 in the third quarter of 2011.

“For the full year 2012, we expect consolidated net sales to increase above 2011 levels by a high-single-digit to low-teens percentage,” Connor said.

“With annual sales at that level, we have raised our expectation for diluted net income per common share for 2012 to be in the range of $6.20 to $6.40 per share, compared to $4.14 per share earned in 2011.”