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Paint Sales Up in Sherwin-Williams’ Q3

Friday, October 30, 2015

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Propelled by its Paint Stores and Consumer Groups, Sherwin-Williams posted profit gains for its third quarter 2015.

The second largest paint company in the U.S. reported Thursday (Oct. 29) that its consolidated net sales increased by 0.1 percent to $3.15 billion  for the quarter and by 2 percent to $8.73 billion for the nine-month period, compared to the same periods a year earlier.

Unfavorable currency translation rates decreased consolidated net sales by 3.6 percent in the quarter and 3.2 percent in the nine-month period.

Chris Connor
Photos: Sherwin-Williams

“In total, it is gratifying to report another quarter of sales increases and earnings per share growth,” said Chairman and CEO Christopher M. Connor.

Diluted net income per common share in the quarter increased to $3.97 per share from $3.35 per share in 2014; the nine-month figure increased to $9.04 per share from $7.39 per share last year. The company credited “improved operating results of the Paint Stores and Consumer Groups.”

Unfavorable currency rates nicked nearly a dime from the per-share price for the quarter and $.20 from the nine-month share price.

Paint Stores Group Ring Up

“Our Paint Stores Group posted another quarter of positive operating results and architectural volume growth,” said Chairman and CEO Christopher M. Connor.

Net sales in the group increased 2.9 percent to $2.09 billion in quarter and increased 5.0 percent to $5.53 billion in nine months, the company said. The group opened 45 net new locations in the first nine months.

Net sales from the stores open for more than 12 calendar months increased by 2.1 percent in the quarter and by 3.9 percent in nine months over last year’s comparable periods. Paint Stores Group segment profit increased $75.6 million to $507.4 million in the quarter and by $163.4 million to $1.12 billion for nine months.

Consumer Group Increases

The Consumer Group net sales increased by 9.4 percent to $421.6 million in the quarter and by 10.4 percent to $1.26 billion in nine months, compared to the same periods in 2014, according to the company.

The Cleveland-based paint company credits sales of its HGTV HOME by Sherwin-Williams paint in Lowe’s stores as the driver for this segment.

Sherwin Williams Paint Shield

The Cleveland-based paint and coatings company posted its third quarter results the day after announcing "one of the most significant technological breakthroughs" in Sherwin-Williams' 150-year history: Paint Shield, a microbicidal paint designed to kill bacteria.

Profit increased to $88.3 million in the quarter from $79.0 million last year and increased $257.9 million in nine months from $222.5 million last year due to improved operating efficiencies.

Global Finishes, Latin America Coatings Slip

The news was less cheery in the Global Finishes Group, the segment comprised of protective and marine, OEM product finishes and automotive finishes.

There, decreased sales and unfavorable currency rates pushed sales down by 9.3 percent for the quarter to $486.1 million and by 7.4 percent to $1.46 billion in nine months.

Segment profit dipped to $55.1 million from $60.8 million last year, due primarily to unfavorable currency translation and the gain on the early termination of a customer agreement in the third quarter of 2014, partially offset by decreasing raw materials costs, the company noted.

Segment profit for nine months decreased to $151.3 million from $162.1 million.

bridge

Global Finishes Group sales were down 9.3 percent for the quarter ended Sept. 30.

Further, the company’s Latin America Coatings Group’s net sales decreased 22.1 percent to $156.0 million in the quarter and dropped by 16.3 percent in the nine month period. Profit in that segment decreased to $2.1 million from $11.8 million last year and dipped to $15.7 million from $27.4 million last year.

“Our Global Finishes and Latin America Coatings Groups are managing through the negative effects of currency devaluation and weakened market demand in some geographies,” said Connor.

“In total, it is gratifying to report another quarter of sales increases and earnings per share growth.”

Looking Ahead

For the fourth quarter, Connor forecast a consolidated net sales increase in the “low single digits” compared to the fourth quarter of 2014. That would put diluted net income per common share in the range of $1.70 to $1.95 per share compared to $1.37 per share earned in the fourth quarter of 2014.

For the full year 2015, the company expects consolidated net sales to “increase by a low single digit percentage compared to full year 2014,” said Connor. “With annual sales at that level, we are increasing our guidance that diluted net income per common share for 2015 to be in the range of $10.75 to $11.00 per share compared to $8.78 per share earned in 2014.”

Connor will hand the CEO torch over to John G. Morikis in January 2016. Morikis has 30 years of experience with the company and has served as its chief operating officer for the past nine years. Connor will continue to serve in the role of executive chairman.

   

Tagged categories: Architectural coatings; Business matters; Coatings Technology; Earnings reports; Finance; Marine Coatings; Paint and Coating Sales; Sherwin-Williams

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