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Sherwin-Williams Releases Q1, 2020 Numbers

Thursday, April 30, 2020

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Global coatings firm The Sherwin-Williams Company (Cleveland) released its first-quarter earnings report for 2020 on Tuesday (April 29), announcing an increase in consolidated net sales, diluted net income per share and net sales from stores located in the U.S. and Canada.

Consolidated net sales increased 2.6%, or $105.8 million, for the first quarter, to $4.15 billion, an increase that was attributed to higher architectural paint sales volume in North American stores and increased sales in the packaging and coil divisions within its Performance Coatings Group across all regions.

However, the increase was partially offset by impacts of COVID-19, continued demand softness in some end markets outside the U.S. and unfavorable currency translation rate changes.

Diluted net income per share increased to $3.46 in comparison with last year’s $2.62, and EBITDA increased 8.3% to $623.1 million, equating to 15% of sales.

Q1 2020 Report

“We delivered outstanding results in the first quarter driven by strong architectural paint demand to start the year, and minimal impacts from the pandemic in our North American stores business until late in the quarter,” said John G. Morikis, Chairman and Chief Executive Officer for Sherwin-Williams.

“My deepest thanks goes to the entire Sherwin-Williams team for their focus on the health and well-being of our employees, our customers, our communities and our Company as we manage through the ongoing COVID-19 pandemic.”

M.O. Stevens, CC BY-SA 3.0, via Wikimedia Commons

Global coatings firm The Sherwin-Williams Company (Cleveland) released its first-quarter earnings report for 2020 on Tuesday (April 29), announcing an increase in consolidated net sales, diluted net income per share and net sales from stores located in the U.S. and Canada.

For the Americas Group, net sales increased 7% to $2.31 billion, which was largely attributed to higher architectural paint sales across all end markets in North American stores, partially offset by unfavorable currency translation rate changes. For stores in the U.S. and Canada open for longer than a year, net sales increased 7.4% in the quarter over last year’s first quarter. Segment profit also increased $57.2 million to $388.3 million, and profit as a part of net sales increased to 16.8% compared to last year's 15.4%.

“In the Consumer Brands Group, higher volume sales through most of the Group’s North American retail customers was more than offset by our planned exit of business at ACE and softness in some international end markets,” said Morikis.

In contrast, net sales in the Consumer Brands Group saw a 4.9% decrease to $622.3 million, which was primarily attributed to softer sales in Asia Pacific, partially due to impacts of COVID-19, and the planned exit of the ACE business. Net sales for this segment were also partially offset by higher volume sales through most of the Group’s retail customers in North America and Europe.

There was also a decrease in segment profit, totaling $83.5 million under last year's $87.9 million. While lower sales were named as a contributing factor, the numbers were partially offset by moderating raw material costs, good cost control and flow through in Europe. Segment profit as a percent of net external sales was flat compared to the first quarter last year, reporting 13.4%.

Sherwin-Williams

In contrast, net sales in the Consumer Brands Group saw a 4.9% decrease to $622.3 million, which was primarily attributed to softer sales in Asia Pacific, partially due to impacts of COVID-19, and the planned exit of the ACE business. Net sales for this segment were also partially offset by higher volume sales through most of the Group’s retail customers in North America and Europe.

Morikis adds that, “In the Performance Coatings Group, moderating raw material costs and good cost control drove margin expansion despite industrial demand that remained highly variable by end market and geography.”

Net sales for the Performance Coatings Group experienced a 1.1% decrease, to $1.22 billion, which was reportedly attributed to softer end market demand in some businesses in Asia Pacific and Europe, partially due to impacts of COVID-19, and unfavorable currency translation rate changes, partially offset by increased sales in the packaging and coil divisions within the Group across all regions. Currency translation rate changes made Group net sales by take a 2.2% hit, but segment profit increased to $113.7 million from last year's $98.7 million.

Looking Ahead

For the fourth quarter, Morikis noted that the company anticipates that the rapid deterioration of the U.S. and global economies experienced late in the first quarter due to the COVID-19 pandemic will most likely continue through the second quarter.

“We see no immediate, meaningful improvement ahead in most end markets we serve, and we are unable to predict when any noticeable improvement will occur,” said Morikis. “Given the trends and indicators we see at this time, we anticipate second quarter 2020 consolidated net sales will decrease by a low-to-mid-teens percentage versus the second quarter of 2019.

“For the full year 2020, we are revising our sales guidance to reflect uncertainties in the timing and pace of improvement in the U.S. and global operating environment. If economic conditions begin returning to normal in the third quarter 2020 and continue improving through the fourth quarter 2020, we anticipate full year consolidated net sales to be flat to down a low single digit percentage. If economic conditions do not materially improve until the first quarter 2021, we anticipate full year 2020 consolidated net sales to decrease by a mid-to-high single digit percentage.”

Sherwin-Williams COVID-19 Responses

In addition to the first quarter earnings report, Sherwin-Williams also included a COVID-19 response, highlighting what the company has done for its employees, customers and community.

According to the report, Sherwin is protecting its employees by providing additional support and has enhanced its employees' benefits, which have been implemented temporarily during the COVID-19 pandemic. Highlights of how the company is protecting its emplpoyees include:

  • Enhanced paid sick and/or family leave;
  • Alternate, remote and flexible working arrangements where possible;
  • Curbside pick-up and delivery in stores;
  • Enhanced sanitary procedures;
  • Social distancing best practices;
  • Return to Work and visitor screening protocols;
  • Cancelled employee in-person training and large group events; and
  • Travel virtually elimated.

For its customers, Sherwin has continued to provide products, services and resources. For small buisnesses, the company has provided links for the U.S. Chamber of Commerce Coronavirus Small Business Guide, CARES Act programs, Families First Coronavirus Response Act (FFCRA) programs, and various state and local government programs

Regarding products, Sherwin reports that its still supplying crticial coatings for home and building products, food and beverage packaging, health care equipment, and energy and water infrastructure.

For communities surrounding its headquarters in Cleveland, Sherwin-Williams has contributed donations to the Cleveland COVID-19 Rapid Response Fund in addition to donating over 250,000 masks and other personal protective equipment from its stores to local first responders.

View all of PaintSquare Daily News' coverage on COVID-19, here.

   

Tagged categories: Asia Pacific; Business management; Business matters; Business operations; Coatings; COVID-19; Earnings reports; EMEA (Europe, Middle East and Africa); Finance; Latin America; North America; Program/Project Management; Sherwin-Williams; Z-Continents

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