INDUSTRY NEWS EXTRA: The Bottom Line for 2001
Results Show Effect of Downturn, but Stronger Growth Trend is Forecast
Several companies also said they would continue cost-cutting programs that began last year in the wake of slowdowns that hit the major economies of North America, Europe, Asia, and South America.
Industry giants The Sherwin-Williams Co., DuPont Co. and PPG Industries Inc. all reported declines in earnings for the fourth quarter and year as a whole compared to a year earlier. But The Valspar Corp., in a summary of sales and profit performance for the first quarter of its new fiscal year ended in late January, said its earnings rose 65% from the same quarter a year earlier. And RPM Inc., staging a comeback following a rough stretch of earnings performances over the last two years and a major restructuring program, reported solid gains in net income for the first half of the company's fiscal year ended Nov. 30, 2001.
Reports from some companies also suggested that architectural coatings sales have remained relatively strong even during the economic downturn that began last year. The architectural segment appears to have benefited from new- and existing-home sales that set new record highs in 2001 in the United States despite a recession that began in March of last year. Industrial-coatings sales, on the other hand, have felt the brunt of a slump that has afflicted the manufacturing sector for more than a year.
Comprehensive details on quarterly financial reports from coatings manufacturers are a regular feature of INSIDER NEWS, the weekly e-mail newsletter published jointly by PCI and the National Paint & Coatings Association. Subscription information is available at the PCI website at www.pcimag.com, and the NPCA website, located at www.paint.org.
Here is a glance at year-end financial reports from several major coatings companies:
The Sherwin-Williams Co. reported fourth-quarter 2001 net income of $45.4 million, a 1.6% decline from the fourth quarter of 2000. Consolidated net sales for the quarter fell 1.3%, to $1.13 billion. For all of 2001, net income was $263.2 million, a decline of 15.0% from 2000. Sales for the year fell 2.8%, to $5.06 billion.
DuPont Co. reported fourth-quarter 2001 net income excluding one-time items of $124 million, a 75% decline from the fourth quarter of 2000. Sales for the quarter fell 17.5%, to $5.2 billion. For all of 2001, net income excluding one-time items was $1.25 billion, a decline of 56.5%% from 2001. Sales for the year fell 12.7%, to $24.7 billion. For the company's Performance Coatings & Polymers segment, fourth-quarter operating income was $95 million, a decline of 51.5% from the prior-year period. Segment sales for the quarter fell 9.3%, to $1.401 billion. For all of 2001, Performance Coatings & Polymers operating income was $319 million, a decline of 52.7% from 2000. Segment sales for the year fell 11.3%, to $5.75 billion.
Ferro Corp. reported fourth-quarter net income of $6.0 million, a decline of 63.4% from the fourth quarter of 2000. Sales for the quarter rose 11.9%, to a record $409.9 million. For all of 2001, net income was $39.2 million, a 46.4% decline from 2000. Sales for the year also were a record high for the company, rising 3.3% to $1.5 billion. Fourth-quarter operating income for the company's Coatings segment was $18.2 million, a decline of 20.5% from the prior-year period. Segment sales for the quarter rose 22.9%, to $278.1 million. For the year, Coatings operating income was $71.1 million, a decline of 28.5% from 2000. Segment sales for the year rose 4.6%, to $920.7 million.
PPG Industries Inc. reported fourth-quarter net income of $83 million, a 34% decline from the fourth quarter of 2000. Sales for the quarter fell 9%, to $1.9 billion. For all of 2001, net income was $387 million, including a $101 million first-quarter restructuring charge, compared to 2000 net income of $620 million. Sales for 2001 declined 4.7%, to $8.2 billion, from a record $8.6 billion in 2000. Coatings-segment fourth-quarter operating income was $136 million, a decline of 8.7% from the prior-year period. Segment sales for the quarter fell 3.5%, to $1.07 billion. For all of 2001, Coatings-segment operating income was $495 million, down 27.7% from 2000. Segment sales for the year declined 5.3%, to $4.41 billion.
Rohm and Haas Co. reported fourth-quarter earnings of $42 million excluding non-recurring items, a 30% decline from the fourth quarter of 2000. Net sales for the quarter fell 12%, to $1.34 billion. For 2001, net earnings from continuing operations excluding non-recurring items were $189 million, a decline of 42% from 2000. Sales for the year declined 10.8%, to $5.6 billion. For the company's Performance Polymers business, which includes coatings, fourth-quarter net earnings from continuing operations were $41 million, a decline of 8.9% from the fourth quarter of 2000. Performance Polymers sales for the quarter fell less than 1%, to $743 million. For all of 2001, Performance Polymers net earnings were $85 million, down from $282 million in 2000. The business's sales for the year fell 6.7%, to $3.17 billion.
Several companies, including DuPont, PPG, Rohm and Haas, Ferro, and H.B. Fuller Co., said they would continue to take aggressive cost-cutting actions in efforts to improve earnings. And Akzo Nobel, the biggest coatings producer worldwide, said it will accelerate a restructuring program launched last year, indicating it will carry out additional work-force reductions in its chemicals and coatings operations.
Sherwin-Williams Chairman and CEO Christopher M. Connor also said that beginning in the first quarter, the company would make "significant investments in our business, primarily in the Paint Stores Segment, to enhance our operations and introduce an expanded color program."
Expressing a view echoed by other corporate leaders, Connor said the year "will continue to be challenging due to the uncertain worldwide economic conditions and the slow, long-term recovery expected."