US Sherwin-Williams still estimating hurricanes' effects on feedstock costs in 2018

24 October 2017 21:35 Source:ICIS News

HOUSTON (ICIS)--US paints and coatings manufacturer Sherwin-Williams remains uncertain of impacts that recent storms in the Caribbean and US Gulf Coast will have on the petrochemical sector, and in turn its company, its executives said on Tuesday.

“How much of the short-term impact of the storms on the petrochemical sector is going to carry over into 2018?” Sherwin-Williams public affairs senior vice president Bob Wells said during the company's Q3 earnings conference call. “And we just don’t know that yet.”

The company’s Q3 net income fell by 18% year on year to $316.6m due to higher raw materials costs, acquisition-related expenses and the impact from natural disasters in the Americas region.

Sherwin-Williams issued guidance in late September that the hurricanes and earthquakes across the Americas was likely to have an impact on its Q3 earnings. The company has hundreds of retail locations throughout the region.

The company declined to give an outlook on raw materials, saying it typically gives such outlooks at the end of the fiscal year.

“Our vantage point is better at year end,” Wells said. “And that’s particularly true here. The reason being that, as you all know, Hurricane Harvey disrupted a meaningful amount of the global chemical’s supply sector.”

The short-term shortages and tightness for several feedstocks the company needs could bleed over into next year, Wells noted.

“The fact of the matter is, at this stage, we don’t know what ‘short term’ means,” he said. “We know the availability of a lot of the monomers is improving, but MMA (methyl methacrylate) in particular continues to be tight and is likely to be tight through 2018.”

The titanium dioxide (TiO2) market remains tight globally, Wells added.

Wells said the company assumes the raw material basket at this point is tracking year over year at the 6.0-6.5% range.

“If you assumed that raw materials were stable from here through 2018, that would put you in the low- to mid-single digit inflation range,” he added.

By David Haydon