Slow paint sales lower Valspar Q2 outlook

10 April 2007 00:09  [Source: ICIS news]

(Adds updates throughout)

HOUSTON (ICIS news)--Valspar lowered its second-quarter earnings guidance on Monday, citing slow sales of architectural paints and wood coatings.

The normal seasonal inventory build for architectural coating retailers has been delayed, with all sales channels showing weak demand, Valspar chief executive William Mansfield said during a conference call with analysts.

“Our customers are very, very carefully controlling their inventories,” he said.

Mansfield said the broad sales softness reflected a weak remodelling market. The architectural coatings market was not expected to improve until late summer, he added.

In the updated outlook, Valspar projected diluted quarterly earnings of 36-40 cents/share, compared with 46 cents/share during the second quarter of 2006.

Valspar said the original annual earnings target of $1.80-1.90/share remained unchanged, although it now expected 2007 earnings to fall on the low end of that range.

Valspar is a key supplier of the do-it-yourself home improvement market via Lowe’s stores, according to sources.

PJ Juvekar, an analyst with CitiGroup, said the Valspar earnings revision does not bode well for other coatings companies and raw material suppliers.

“Valspar’s announcement is a leading indicator of things to come in the US paint industry, since Valspar is the closest to customers and sees the impact before other players,” Juvekar said in a note to investors.

Architectural paints and coatings are an important end-market for a variety of chemical products including solvents, latexes, resins and pigments, especially titanium dioxide (TiO2).

By: David Barry
+1 713 525 2653

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