Sherwin-Williams expects US housing recovery to persist

18 April 2013 20:22  [Source: ICIS news]

HOUSTON (ICIS)--Sherwin-Williams expects the US housing recovery to persist, as most indicators point to a robust and sustainable recovery for this key chemical end market, an executive for the US-based paints producer said on Thursday.

The company holds this view despite some declines in key housing-market indicators.

In April, market confidence among US home builders fell for the third consecutive month.

In March, US single-family housing starts fell.

Indeed, Sherwin-Williams Q1 net sales rose by just 1.4% year on year.

However, the slow growth reflected bad weather, which lowered sales of exterior paint, said CEO Christopher Connor. Connor made his comments during an earnings conference call.

Interior paint sales actually rose almost 10%, Connor said.

Another reason behind the slow growth was the actual make-up of the first-quarter calendar, which had fewer sales days, Connor said.

For Sherwin-Williams, the best gauge for paint demand is the performance of the company's paint-stores group, he said. Comparable store sales rose more than 3%.

"We're encouraged by the demand trends we have seen so far in the second quarter," he said.

The company remains confident that US architectural paint sales, particularly to the residential market, should increase at the paint season approaches, he said.

"It is the residential portion of this architectural market that is rebounding, both in the new construction as well as the repaint," Connor said.

The commercial market tends to lag trends in the residential market, he said. So far, Sherwin-Williams is seeing some lift in the commercial repaint segment as occupancy rates improve.

However, the company is not seeing so much of a lift in the new construction portion of the commercial market, Connor said.

For the current second quarter, the company expects sales to increase by 5-9%, compared with the 2012 second quarter, the company said.

As such, the company expects Q2 diluted net income to be $2.50-2.60/share, compared with 2012's record of $2.17/share.

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals, resins and derivative products such as plastic pipe, insulation, paints and coatings, adhesives, roofing materials and synthetic fibres, among many others.

The American Chemistry Council (ACC) estimates that each new single-family home built represents some $15,000 (€11,600) worth of chemicals and derivatives used in the structure or in production of component materials.

Additional reporting by Joe Kamalick and Stefan Baumgarten

($1 = €0.77)

By: Al Greenwood
+1 713 525 2645

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