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Stores Fuel Sherwin-Williams’ Top Year

Friday, February 1, 2013

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Sales growth and price hikes in its Paint Stores Group propelled The Sherwin-Williams Company to record highs for 2012 and its fourth quarter, the company reported Thursday (Jan. 31).

The company’s consolidated net sales increased by 8.8 percent to $9.53 billion for the year and by 7.3 percent to $2.22 billion for the fourth quarter ended Dec. 31, 2012, compared to the same periods a year ago, the Cleveland, OH-based paint maker said.

Sherwin Williams Paint Stores
The Sherwin-Williams Company

The company's 2012 and fourth-quarter performance was fueled by its Paint Stores Group. Sherwin-Williams is the largest specialty retailer of paint and painting supplies in the U.S, with more than 3,500 stores.

Net income increased to $117.2 million, from $14.5 million in the fourth quarter of 2011. (An Internal Revenue Service settlement of nearly $75,000 put a crimp in the company's fourth-quarter income in 2011.)

Unfavorable currency translation rate changes decreased consolidated net sales by 1.0 percent for the quarter and 1.8 percent for the year, offset somewhat by about a 1 percent increase from acquisition activity.

Robust Paint Stores Group

Sales for the Paint Stores Group surged 13.2 percent to $5.41 billion for the year and increased 9.8 percent to $1.25 billion for the quarter, driven by higher paint sales volume “across all end-market segments” and selling price increases, the company said.

The group posted record net sales in the prior two quarters of 2012 as well. Net sales increased by 9.6 percent to $1.55 billion in the third quarter and by 14.6 percent to $1.49 billion in the second quarter.

Net sales from stores open for more than 12 calendar months increased by 12.5 percent from the prior-year period.  

Christopher M. Connor

Chairman and CEO Christopher M. Connor says all operating segments contributed to the record year with increases in sales and operating profit.

Paint Stores Group profit rose $861.8 million in the year from $645.7 million last year and increased to $181.5 million in the quarter from $133.4 million last year.

Chairman and CEO Christopher M. Connor said the Paint Stores Group had set the pace for the company’s fourth quarter and 2012 performance, noting that all other operating segments also contributed to the record year with increases in sales and operating profit.

Consumer Group Up for Year, Down for Quarter

Net sales for the company’s Consumer Group increased 3.7 percent to $1.32 billion in the year and 1.4 percent to $225.8 million in the quarter as the business benefited from selling price increases and acquisitions, the company said.

Acquisitions increased net sales 3.2 percent and 6.5 percent in the year and quarter, respectively, offsetting lower volume sales to most of the Group’s retail customers.

Segment profit improved to $216.4 million, from $173.7 million in 2011, due primarily to selling-price increases and cost control; however raw materials costs continued to cut into the bottom line.

On the other hand, segment profit decreased to $23.3 million for the fourth quarter, from $30.2 million last year, which was attributed to a “more normal seasonal decline” in the company’s internal finished goods inventory and increases in raw materials costs that were partially offset by selling-price increases.

Global Finishes, Latin America Post Gains

Sales for the company’s Global Finishes Group, comprised of protective and marine, OEM product finishes and automotive finishes, rose 4.4 percent to $1.96 billion for the year.

In the fourth quarter, net sales increased 5.1 percent to $487.1 million.

“The Global Finishes Group continued improving segment profit as a percent to sales through increased selling prices and efficiencies gained from the continued integration of prior-year acquisitions,” Connor added.

Comex Group

In November, Sherwin-Williams announced that it would buy Comex Group for $2.34 billion to increase its presence in markets that have few paint stores. CEO Christopher Connor said the deal was on track to close.

Profit for the year was $147.2 million, up from $90.3 million reported last year; quarterly profit increased to $34.1 million, up from $13.0 million for the same period a year earlier. The profit increases were due to selling-price increases, increased paint sales volume, and good cost control partially offset by increases in raw material costs, the company said.

Unfavorable foreign currency translation rate changes and acquisitions decreased segment profit $11.9 million in the year and $3.4 million in the quarter.

Latin America Coatings Group sales also increased by almost 1 percent for the year to $836.1 million, and by 5.2 percent to $231.5 million for the quarter, due primarily to selling-price increases and higher paint sales volume that were partially offset by unfavorable currency translation rate changes.

Despite softening of demand in its end markets, segment profit for 2012 improved to $81.2 million, compared to $75.5 million last year and increased to $30.1 million in the quarter from $26.4 million last year, the company said.

Continued Investment in Paint Stores

“We are continuing to invest in our business by expanding the Paint Stores platform,” Connor said. “In 2012, we added 70 net new stores, finishing the year with 3,520 stores in operation.”

The company is expecting the good times to continue on into the first quarter of 2013 and for the year as a whole, with sales for the year forecast to increase by “a mid-single digit” percentage. Sherwin-Williams’ forecasts do not include any effect from the proposed Comex acquisition, the company noted.


Tagged categories: Business matters; Coatings manufacturers; Earnings reports; Economy; Finance; Sherwin-Williams

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