16 October 2008 23:52 [Source: ICIS news]
HOUSTON (ICIS news)--US paint maker Sherwin-Williams' third-quarter sales revenue and earnings per share exceeded the company's forecasts but the price gains came at the expense of sales volume, the company said on Thursday.
Net sales for the three months ended 30 September rose 3.3% to a record $2.3bn (€1.7bn) but the company posted an 11.5% decline in third-quarter net income due to high input costs and a worsening economy that has particularly exacerbated an already weak US housing market.
"Pricing in the stores group was up slightly ... and volumes were down in the high single-digit range," CEO Christopher Connor said during the company's third-quarter earnings conference call.
"Weakness in our sales volume ... proves that we are not immune to the significant downturn in both the domestic and worldwide coatings demand," he said.
"Although we are committed to keeping costs in line with sales, we believe the best response to declining volume is to continue to expand our controlled distribution platform into new markets, as well as to continue develop and launch new innovative products and services," Connor added, without elaboration.
So far this year, the company has opened 57 stores and closed 74, for a net reduction of 17. The company intends to open 100 new stores this year while closing a total of 80.
Margins were down due to persistently high raw materials costs, he said. Although weakening crude oil pricing was beginning to be felt, he added, the company continued to forecast raw material prices up by 9-14% year-over-year.
Connor said the fourth quarter will likely see gross margins fall below year-ago levels, global demand continue to slip and input cost pressure to continue as raw materials price increases work their way through the supply chain.
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Its performance beat expectations despite the drop in Q3 profits, according to a research note by JP Morgan.
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