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Sales Soar at Sherwin-Williams

Friday, July 18, 2014

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Nearly all of the Sherwin-Williams Company’s segments saw sales gains in both the second quarter and first half of 2014, propelling the company to record sales.

The company announced Thursday (July 17) that it had net sales gains of 12.1 percent in the second quarter and 10.8 percent in the first six months.

The Cleveland-based paint and coatings maker saw an increase in consolidated net sales of $329.1 million, to $3.04 billion, in the second quarter, and $528.5 million, to $5.41 billion, in the first six months, the company stated in its second-quarter financial report.

 

The boost was mainly attributed to higher paint sales volumes in the Paint Stores Group and acquisitions.

 

Sherwin-Williams Q2
Photos: The Sherwin-Williams Company

Higher volume in the Paint Stores Group boosted Sherwin-Williams net sales. The group opened 33 new stores in the first six months of the year.

 

Chairman and CEO Christopher M. Connor said the company was “pleased with the continued strong positive sales and earnings per share momentum,” adding that the Paint Stores Group was “strong across all end market segments.”

 

New Stores Bring in the Bucks

 

Net sales in the Paint Stores Group increased 17.2 percent to $1.88 billion in the quarter and 16.9 percent to $3.24 billion in six months, mainly because of higher architectural paint sales volume across all end market segments and acquisitions.

 

This was due, in part, to the opening of 33 new stores in the first six months of the year, Connor said.

 

“We are continuing to invest in our business. For the year, we expect our Paint Stores Group to open 80 to 90 new stores,” he said. “Our balance sheet remains flexible and is positioned well for future acquisitions and other investments in our business.”

Net sales from stores open for more than twelve calendar months increased 9.8 percent in the quarter and increased 9 percent in six months over last year's comparable periods.

Profit jumped $42.9 million to $375.9 million in the quarter,up from $333 million last year, and increased $59.4 million to $522.1 million in six months, up from $462.7 million last year. This was attributed to higher paint sales volume partially offset by the loss from acquisitions and increases in selling, general and administrative expenses.

Acquisitions increased net sales 6.5 percent in the quarter and 6.8 percent in six months. However, acquisitions had an unfavorable impact on segment profit to the tune of $10.4 million in Q2 and $27.1 million in the first six months.

Sales Gain for Consumer Group

 

The Consumer Group saw net sales increase by 10.1 percent to $433.4 million in the quarter and by 8 percent to $758.7 million in six months, attributable to higher volume sales to most of the group's retail customers and the impact of acquisitions.

 

Sherwin-Williams

The only segment that saw sales decline was the Latin America Coatings Group.

 

Profit increased to $92.5 million in the quarter, up from $79 million last year, and to $143.6 million in six months, up from $133 million year-over-year.

 

Global Finishes Boosts Sales

 

Net sales for the Global Finishes Group increased 6.1 percent to $544.6 million in the quarter, primarily because of higher paint sales volume and selling price increases. Six months sales grew by 4.2 percent to $1.04 billion, due to selling price increases partially offset by unfavorable currency translation rate changes.

 

The segment squeezed out a small profit in Q2, increasing to $54.9 million from $54.5 million last year. Higher paint sales volume and selling price increases were partially offset by charges of $4.5 million in the quarter related to the exit of the company's business in Venezuela. Six month profit jumped from $88.4 million in 2013 to $101.3 million.

 

The segment is comprised of protective and marine, OEM product finishes and automotive finishes.

 

Latin America Drops

 

The Latin America Coatings Group's net sales decreased 8.9 percent to $181.2 million in the quarter and dropped 9.5 percent to $363.6 million in six months.

 

Unfavorable currency rate changes decreased net sales by 11.3 percent in the quarter and 13.9 percent in six months.

 

Chris Connor

"Our balance sheet remains flexible and is positioned well for future acquisitions and other investments in our business," said CEO Chris Connor.

 

While the segment's profit increased in the quarter to $5.7 million from $0.9 million last year, it dropped from $21.7 million to $15.6 million in the first six months year-over-year.

 

Looking Forward

 

“For the third quarter, we anticipate our consolidated net sales will increase 9 to 14 percent compared to last year's third quarter," Connor said.

 

“This guidance includes our expectation that the Comex acquisition will increase net sales $120 million to $130 million and reduce diluted net income per common share by approximately $.05 per share in the third quarter.”

 

Despite an unsuccesful attempt to acquire the entire Consorcio Comex business, Sherwin-Williams completed an acquisition of the company's North American paint business in September 2013. Connor added: "The Comex acquisition is performing better than expected in the year."

 

He said that for the full year 2014, the company expects consolidated net sales to increase 8 to 13 percent compared to 2013.

“This annual guidance includes our expectation that the Comex acquisition will increase net sales by a low single digit percentage in the year and negatively impact diluted net income per common share $.35 per share in 2014.”

   

Tagged categories: Business matters; Coatings manufacturers; Earnings reports; Finance; Market; Paint and Coating Sales; Sherwin-Williams

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