Sherwin-Williams’ paint stores rode to the rescue of its Global Finishes Group in the third quarter, with a strong performance that more than offset weaker sales in the protective, marine, automotive and OEM family.
The Cleveland paint and coating maker saw consolidated net sales increase by 4.8 percent to $2.6 billion for the third quarter and by 9.2 percent to $7.31 billion for the nine-month period, compared to the same periods of a year ago, Sherwin-Williams reported Thursday (Oct. 25).
|Net sales in the Global Finishes Group, which includes protective and marine, inched downward for the quarter but increased for the nine-month period.|
Unfavorable currency translation rate changes eroded consolidated net sales by about 2.2 percent for the quarter and nine-month periods, offset somewhat by a 1 percent increase from acquisitions.
Diluted net income per common share in the quarter increased to $2.24 from $1.71 in 2011; the nine-month figure increased to $5.37 per share from $3.98 last year. The company credited “strong sales volumes and operating results driven primarily by Paint Stores Group,” which also had a strong second quarter.
Unfavorable currency rates nicked a nickel from the per-share price for the quarter and $.11 from the nine-month share price.
Paint Stores: Strong Growth
“We are pleased to report record sales and earnings per share on the continued positive sales volume and strong operating results of our Paint Stores Group,” said Chairman and CEO Christopher M. Connor.
“Selling price increases implemented across all segments in the previous 12 months are gaining traction against the higher raw-material costs. The Paint Stores Group volume growth was strong across all end market segments.”
Net sales in the group increased by 9.6 percent to $1.55 billion in the quarter and by 14.2 percent to $4.16 billion in nine months, due to increased sales volume across all end markets and higher selling prices, the company said. The group opened 28 net new locations in the first nine months.
Net sales from stores open for more than 12 calendar months increased by 8.9 percent in the quarter and by 13.6 percent in nine months over last year's comparable periods. Paint Stores Group segment profit increased by $63.7 million to $300.6 million in the quarter and by $167.9 million to $680.3 million for nine months.
Global Finishes, Consumer Slip
The news was less bright in the Global Finishes Group, comprised of protective and marine, OEM product finishes and automotive finishes.
There, decreased sales and unfavorable currency rates pushed sales down 1.0 percent for the quarter, but the nine-month figure still increased by 4.1 percent to $1.47 billion, due to overall higher sales volume, acquisitions and price increases.
|Strong growth in the Paint Stores Group for the second consecutive quarter gave Sherwin-Williams a reason to smile.|
In the second quarter, net sales of Global Finishes increased by 3.3 percent, giving the group a 6.9 percent increase for the first half of the year. Those gains came from price increases, acquisitions and higher paint sales volume.
Segment profit increased in the quarter to $36.4 million, from $27.6 million last year, due primarily to selling price increases; segment profit for nine months increased to $113.1 million from $77.3 million last year.
Net sales in the Consumer Group decreased 1.0 percent to $348.0 million in the quarter, due primarily to lower volume sales to most of the group's retail customers, mostly offset by acquisitions and selling price increases. Price hikes drove up net sales over nine months by 4.3 percent to $1.07 billion.
“Our Consumer Group improved their operating results through operating efficiencies and selling price increases,” said Connor. “Our Global Finishes and Latin America Coatings Groups are managing to improve their operating profit results despite the unfavorable effects of currency and the softening demand in their end markets.”
For the fourth quarter, Connor forecast a consolidated net sales increase in the “mid-single digits” compared to the fourth quarter of 2011. That would put diluted net income per common share in the range of $.98 to $1.18, compared to $.14 per share earned in the fourth quarter of 2011.
For the full year 2012, the company expects consolidated net sales to “increase above 2011 levels by a high single-digit percentage,” said Connor. “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 $6.35 to $6.55 per share compared to $4.14 per share earned in 2011.”