Sherwin-Williams Releases Q2 Numbers
The Sherwin-Williams Company (Cleveland) released its 2018 second-quarter earnings report on Tuesday (July 24), reporting a record for the quarter with a 27.8 percent increase in consolidated net sales to $4.77 billion, which the company attributes primarily to higher Valspar sales.
The company also noted that consolidated net sales increased 34.5 percent to $8.47 billion in the last six months, which, in addition to Valspar sales, it attributes to higher paints sales volumes In The Americas Group, as well as selling price increases.
Report by Segment
"All three operating segments delivered year-over-year improvement in net sales and profit,” said John G. Morikis, the company's chairman, president and chief executive officer.
“The Americas Group posted another strong quarter of volume growth and profit improvement. The Consumer Brands Group is executing well on its expanded partnership with one of its largest customers. The Performance Coatings Group had sales and volume growth across most of its businesses and improved their operating margin on good cost control and effective pricing actions. The Valspar acquisition passed the one year anniversary on June 1, 2018, and both the Consumer Brands and Performance Coatings Groups are ahead of schedule in integrating their respective businesses.”
The company reported a net sales increase of 7.7 percent to $2.63 billion on the quarter for The Americas (which includes the company's own paint stores), attributed to higher architectural paint sales volume and selling price increases. Segment profits also increased by $37.2 million to $569.9 million in the quarter, however, segment profit as a percent to net sales decreased in the quarter from 21.9 percent to 21.7 percent, as the margins were not enough to offset unfavorable foreign currency transaction losses and a postretirement benefit settlement, according to the company.
The company also noted that consolidated net sales increased 34.5 percent to $8.47 billion in the last six months and, in addition to Valspar sales, attribute the increase to higher paints sales volumes In The Americas Group as well as selling price increases.
The Consumer Brands Group, which includes paints sold in other retailers, saw a net sales increase of 45 percent, to $777.7 million in the quarter, which was also attributed to Valspar sales and selling price increases, but also partially offset by lower volume sales to some retail customers, the company noted. Higher raw-material costs did take their toll on segment profit, which decreased in the quarter from 14.2 percent to 11.7 percent.
Net sales for the Performance Coatings Group, which includes protective and marine as well as industrial coatings, had the highest increase in the quarter, with a 79.9 percent increase to $1.37 billion, also attributed to both Valspar sales and selling price increases. The profit increased in the quarter to $144.2 million from $62.3 million, and the segment was the only one to see an increase of profit as a percentage of net external sales in the quarter, to 10.5 percent from 8.2 percent last year.
“For the third quarter, we anticipate our consolidated net sales will increase a mid-to-high single digit percentage compared to last year's third quarter,” Morikis said.
“For the full year 2018, we expect our consolidated net sales will increase by a high-teens to low-20 percentage, including incremental Valspar sales of $1.85 billion for the first five months of 2018, compared to the full year 2017.”
The company also noted that it purchased 850,000 shares of its common stock in the six months that ended June 30.