) reported net earnings of $2.21 per share in the second quarter of
2012 versus $1.74 per share in the year-ago quarter. The results
surpassed the Zacks Consensus Estimate of $2.12.
The second-quarter 2012 earnings excluded negative impact of 4
cents from currency translation, while second-quarter 2011 earnings
included charges of 8 cents related to repurchase of long-term
debt. Including these charges, earnings were $2.17 per share in the
reported quarter compared with $1.66 in the year-ago quarter.
Net sales for the quarter increased 9.3% year over year to $2.57
billion, surpassing the Zacks Consensus Estimate of $2.68 billion.
The growth was driven by an increase in paint sales volume and
selling price, partially offset by negative impacts of currency
Performance by Segment
Paint Stores Group
posted net sales of $1.49 billion in the reported quarter, up 14.6%
from the year-ago period. The improvement largely stemmed from the
increase in paint sales volume and selling price.
Segment profit increased 29% to $267 million from $206.6 million in
the prior year due to higher paint sales volume and selling price,
partially offset by soaring raw material prices as well as selling,
general and administrative expenses.
Net sales of the
went up 5.9% to $397.7 million, driven by an increase in selling
price and higher sales volume.
Segment profit climbed 31.6% to $80.8 million in the quarter.
The increase was due to a rise in selling prices and better cost
management, which was partially offset by escalating raw material
Net sales of the
Global Finishes Group
soared 3.3% to $498.7 million in the quarter as a result of
acquisitions, higher selling price and paint sales volume.
The segment's profit was $48 million, jumping 58.9% year over
year. The progress achieved can be ascribed to increased paint
sales volume and selling price, partially offset by increased raw
Latin America Coatings Group
sales declined 4.5% to $187.3 million in the quarter due to
unfavorable currency translation changes, partially offset by
selling price increases and higher paint sales volume.
Segment profit dropped 70% to $9.3 million in the quarter from
$15.8 million in the previous year quarter, primarily due to
escalation in raw material costs and negative foreign currency
translation, partially offset by improved paint sales volume and
selling price increases.
Sherwin-Williams acquired 1.5 million shares of its common stock
through open market purchases in the reported quarter. The company
had remaining authorization to purchase 17.75 million shares as of
June 30, 2012.
For the third quarter of 2012, the company expects consolidated
sales to increase in the mid single digits compared to the
prior-year quarter. It expects earnings per share in the band of
$2.05-$2.20 for the quarter.
For fiscal 2012, the company anticipates that consolidated net
sales would increase above the 2011 levels by a high single
digit-to-low-teens percentage. It has revised the forecast for
earnings per share upwards to a range of $6.20-$6.40 from the
previous range $5.75 to $6.05.
Sherwin-Williams' philosophy is to diversify its customer base and
expand its operations into various geographies. The company follows
a strategy of growing through acquisitions and also through
internal initiatives such as efficient working capital management
and innovation. This policy enables the company to somewhat reduce
its dependency upon prevailing market conditions.
However, Sherwin-Williams is facing higher raw material costs,
primarily acrylic latex and titanium dioxide (a key paint pigment)
in the Consumer group segment. The segment purchases raw materials
for the company.
DU PONT (EI) DE (DD): Free Stock Analysis
PPG INDS INC (PPG): Free Stock Analysis Report
SHERWIN WILLIAM (SHW): Free Stock Analysis
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Sherwin-Williams competes with companies like
E. I. du Pont de Nemours and Company
PPG Industries Inc.
). The company retains a short-term Zacks #2 Rank (Buy). We have a
long-term Neutral recommendation on the stock.