Sherwin-Williams Lowers Guidance
July 21 2016 - 8:50AM
Dow Jones News
Sherwin-Williams Co. lowered its fiscal-year earnings guidance
in preparation to buy fellow paint maker Valspar Corp., and as it
posted second-quarter results in line with expectations.
The company said it now expects $11.65 to $11.85 in per-share
earnings for 2016. In April, Sherwin-Williams had forecast $12.50
to $12.70. Sherwin said the new numbers reflect its acquisition of
Valspar, a consumer-focused paint maker that distributes its
products through home-improvement chain stores such as Lowe's Co.
and Ace Hardware.
Valspar shareholders late last month approved the company's sale
to Sherwin-Williams for more than $9 billion—Sherwin's biggest
acquisition ever.
Sherwin-Williams also said it expects to earn $4.10 to $4.30 a
share in the current quarter, including 20 cents of
acquisition-related costs and 10 cents of tax benefits. Analysts
surveyed by Thomson Reuters are forecasting per-share earnings of
$4.41 on revenue of $3.32 billion.
Sherwin reported that sales for stores open for more than 12
months increased 5.2% in the quarter compared with last year. The
company said performance in its paint stores and global-finishes
segments helped its bottom line.
Over all, Sherwin posted a profit of $378.1 million, or $3.99 a
share, up from a profit of $349.9 million, or $3.70 a share, a year
prior. Revenue rose 2.8% to $3.22 billion.
In April, the paint retailer said it was expecting $3.95 to
$4.15 a share on revenue of $2.19 billion to $3.29 billion.
Sales in paint stores grew 6.2% to $2.11 billion, due to higher
volume of architectural paint sales. The segment's profit rose to
$509 million from $433.4 million last year.
The company's consumer segment saw a 2.6% decline in sales to
$477.5 million. Sherwin blamed the decline on the past year's
initial shipment of its HGTV Home by Sherwin-Williams paint to
Lowe's stores. The segment's profit fell to $108.3 million from
$114.2 million a year earlier.
Global finishes sales in U.S. dollars fell 1.3% to $499.2
million. Unfavorable currency rates pushed net sales down 2.6% in
the quarter. In its Latin America coatings segment, sales in U.S.
dollars fell 11.2% to $133.3 million in the quarter, partially due
to unfavorable exchange rates. The segment posted a loss of $9.6
million us dollars compared with a profit of $4 million a year
ago.
Shares of Sherwin-Williams fell 5.2% in light premarket
trading.
(END) Dow Jones Newswires
July 21, 2016 09:35 ET (13:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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