Leading paints and coatings maker
The Valspar Corporation
) announced the collaboration with B&Q, an operating company
of Kingfisher plc, to provide a comprehensive suite of premium
Valspar paint across all of its 350 locations in the U.K. and
Ireland. The collaboration is a part of Valspar's effort to
expand its global paint business by offering new paint solutions
to customers and new retail partners.
Valspar will also provide exterior and interior paints to its
customers apart from making available customized colors as per
the customers' choice. The concept is expected to come online in
all the locations throughout 2013.
B&Q is the leading Do-It-Yourself (DIY) and garden center
retailer in the U.K. and Ireland and offers a host of
inspirational home improvement and garden products for the
homemaker and trade professionals.
In August 2012, Valspar released its results for the third
quarter of fiscal 2012 ended July 27. The company's adjusted
(excluding restructuring expenses) earnings of 97 cents per share
in the quarter beat the Zacks Consensus Estimate by a penny and
exceeded the year-ago quarter's earnings of 80 cents. Profit, as
reported, surged 28% year over year to $86.4 million or 92 cents
a share, helped by lower cost of sales.
Revenues crept up 0.7% year over year to $1,078.3 million,
missing the Zacks Consensus Estimate of $1,135 million. Revenues
were negatively affected by unfavorable currency exchange swings.
Barring the currency impact, sales rose 3% in the quarter.
Revenues from the larger Coatings segment edged up 1.6% to
$569.7 million, aided by new businesses, while the same from the
Paints segment rose just 0.2% to $442.6 million, due to a soft
residential housing market in Australia.
Valspar's continued efforts in winning new businesses will
position it well for the future and help offset lower demand in
core markets. Its fastest growing markets are the emerging
economies, such as China. However, we are concerned about cost
pressures associated with raw material inflation. Moreover,
weakness in the residential housing market in Australia may
continue to hurt paint sales moving ahead.
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Minneapolis-based Valspar competes with
Sherwin Williams Company
PPG Industries Inc.
) and currently retains a short-term (1 to 3 months) Zacks #3
Rank (Hold). We have a long-term (more than 6 months) Neutral
recommendation on the stock.