US RPM lowers fiscal Q3 guidance as cold weather disrupts logistics

Al Greenwood

18-Feb-2021

HOUSTON (ICIS)–RPM International lowered its guidance for the fiscal third-quarter because severe winter weather has disrupted logistics throughout North America, the US-based coatings, adhesives and sealants producer said on Thursday.

Frigid weather has disrupted transportation, distribution and supply chains, RPM said. As a result, several shipping days were lost during the company’s fiscal third-quarter, which ends on 28 February.

North America makes up 70% of the company’s revenue. RPM has consequently lowered its outlook for sales and adjusted earnings before interest and tax (EBIT).

Sales should rise by the low single digits during RPM’s fiscal third quarter.

That compares with the company’s earlier guidance, when RPM said on 6 January that sales should grow by the mid-single digits.

Adjusted EBIT should grow by 10-15%, RPM said. Earlier it expected adjusted EBIT to grow by at least 30%. RPM did not specify whether the growth would occur quarter on quarter or year on year.

Prior to the the cold front, RPM was on track to beat its earlier guidance, based on its performance during the first two months of its fiscal third quarter, said Frank Sullivan, RPM CEO. He highlighted the company’s MAP to Growth programme, which aims to improve the company’s operation costs.

Most of the business that RPM loses during the fiscal third quarter will likely be deferred to the company’s fourth quarter, which begins on 1 March, Sullivan said.

Home remodelling and repairs is an important end market for RPM’s products. The company did not discuss how any damage caused by the cold storms could affect demand for construction products such as paints and coatings.

However, past disasters such as hurricanes and wildfires typically cause normal demand to be deferred and new demand for repairs to rise.

The construction industry is an important end market for chemicals.

Paints and coatings are made with titanium dioxide (TiO2) and several solvents such as glycol ethers, butyl acetate (butac), methyl ethyl ketone (MEK) and isopropanol (IPA).

For polymers, most polyvinyl chloride (PVC) goes into construction, according to the American Chemistry Council (ACC). Polyurethanes and expandable polystyrene (EPS) are used in insulation.

Other polymers used in construction include high density polyethylene (HDPE).

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