17 April 2014 22:46 [Source: ICIS news]
HOUSTON (ICIS)--Sherwin-Williams anticipates full-year 2014 growth of 8-14% based on economic signs so far this year despite persistently harsh and disruptive winter weather, the US-based coatings and paint manufacturer said on Thursday.
“We remain optimistic as US residential demand for architectural paint strengthens… and we are encouraged by early signs of a more robust commercial recovery,” CEO Christopher Connor said during a conference call on the company’s Q1 earnings.
Those signs include a March single-family housing-starts gain of 6% over February, lower used- and new-home inventory, and sales momentum in the contractor segment, the company said.
Meanwhile, the acquisition of Comex’s 306-plus paint stores and eight manufacturing sites in the US and Canada also is expected to help increase full-year consolidated net sales by low double-digit percentages year over year, Sherwin-Williams said.
As for raw materials, the company said pressure from titanium dioxide (TiO2) pricing still remains “a moderate risk” during the second half of the year, but that overall inflation from feedstock costs will not increase by more than 2%.
The company’s Latin American coatings segment was the only Sherwin-Williams’ business to experience a decrease in Q2 net sales, due to the region’s economic plight and poor currency exchange rates.
Although the company was unwilling to offer any full-year guidance on sales in that region, Connor conceded that “we are not as optimistic about improved margins now as we were three months ago.”
The company’s 2014 first-quarter net income fell marginally from the year-ago period despite a 9.2% increase in sales attributed to higher paint volumes. The company said higher distribution costs in its consumer segment reduced year-over-year net income.
Connor also addressed the termination of its agreement to purchase the Mexico coatings business of Consorcio Comex, saying Sherwin-Williams is seeking a judgement that it is not in breach, as alleged by Comex.
“This action was entirely defensive on our part,” Connor said. “We could not allow an allegation of breach to stand without an appropriate response.
“At this point, we do not know how long this legal process will take,” Connor added, “but both parties agree the termination is final, and we’re moving on.”
Although Sherwin-Williams previously acquired the North American operations of Comex and is still integrating that business with its own, its November 2012 agreement to purchase the Mexico coatings business was rejected by the Mexican Federal Economic Competition Commission.
Sherwin-Williams appealed, but the seller later accused the company of breaching the agreement by not making “commercially reasonable” efforts to complete the acquisition.
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