(adds updates on divisions’ performance from paragraph 5)
LONDON (ICIS)--Valspar’s net income in the three months ending 25 July increased 4.3% to $97.8m as sales rose 10.5% to $1.2bn, on the back of the improvement at its coatings division and the effect of acquisitions, the US-based coatings and paintings producer said on Tuesday.
Valspar’s income before taxes also improved slightly in the company’s financial third quarter (May-July), from $138.5m in 2013 to $140.6 this year.
As a consequence, diluted earnings per share (EPS) stood in the third quarter at $1.14, an increase of 9.6%.
“These results were driven by the successful integration of acquisitions; strong performance from China and Europe; improved sales and profitability in our Coatings segment; benefits of new growth initiatives; investments in innovative products; and the positive impact of productivity initiatives,” said Gary Hendrickson, Valspar’s CEO.
By business divisions, Coatings registered the biggest growth, with net sales jumping 16% to $666m, and adjusted earnings before interest and taxes (EBIT) at $122m, an increase of 21%, representing an adjusted EBIT margin (percentage of net sales) of 18.3%, compared to the 17.6% margin registered during its third quarter of 2013.
“We realised the highest growth in the General Industrial product line, which benefited from the impact of the Inver acquisition and modestly improving end market demand. Our Packaging product line continues to grow, driven by market share gains and momentum of our non-BPA [Bisphenol A] products,” said Valspar’s CEO.
The Paints division also registered an increase in sales, although more moderate. Third-quarter total sales stood at $474m, an increase of 4% compared to the same period a year earlier.
The division's adjusted EBIT during the period decreased 16% to $43.7m, and that also took the adjusted EBIT margin down to 9.2%, compared to a 11.5% margin during the third period of 2013, on the back of investments to upgrade capacities, said Valspar.
“Paints segment adjusted EBIT of $44m was down 16% from the prior year primarily due to planned increases in advertising and marketing investments to support new retail programs in the home improvement and independent hardware channels,” said the company.
Hendrickson added that based on the performance observed during the company’s first three quarter of the fiscal year, Valspar is upgrading its sales guidance by 9% compared to the full-year sales observed in 2013, as well as updating adjusted EPS to the range between $4.05-4.15.
Hendrickson had already said in May the good performance at the Coatings division was a proof the housing market in the US was recovering.