The Sherwin-Williams Company ( SHW )
has voluntarily recalled 98,400 units of its Krylon-branded acrylic
paints citing potential fire hazard to consumers arising from
leakage in the aerosol canisters. The consumers have been advised
to immediately stop using the recalled products and contact the
company for a refund.
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The Ohio-based leading paints and coatings maker has recalled
12-ounce cans of its Krylon Triple Thick Crystal Clear Glaze and
11-ounce cans of Krylon Indoor/Outdoor Crystal acrylic paint with
clear stain finish. The company noted that it has received 31
reports of leaking paint canisters including cases, which involve
property damage. However, no injuries have been reported.
Higher paint sales volume and pricing contributed to a roughly 9%
year-over-year surge in Sherwin-Williams' sales in the second
quarter, reported on July 19. Revenues from "The Paint Stores
Group," the company's largest segment, climbed nearly 15% to $1.49
billion. Sherwin-Williams raised its earnings guidance based on
strong sales and increased prices and demand for its Paint Stores
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
Despite weak housing markets, the company continues to invest in
its core Paint Stores Group to boost market share. An improvement
in the market demand in the near term is expected to place
Sherwin-Williams in a better position.
However, Sherwin-Williams contends with higher raw material costs,
primarily acrylic latex and titanium dioxide (a key paint pigment)
in the Consumer Group segment. Moreover, the company faces
significant challenge in the second half of 2012 given the
weakening market conditions in Europe and Latin America.
Sherwin-Williams, which competes with E. I. du Pont de
Nemours and Company ( DD ) and
PPG Industries Inc. ( PPG ),
retains a short-term Zacks #2 Rank (Buy). We have a long-term
Neutral recommendation on the stock.