Sherwin-Williams' Fourth-Quarter Profit Up 30 Percent
January 28, 2010
CLEVELAND – The Sherwin-Williams Co. has announced its financial results for the fourth quarter and year ended Dec. 31, 2009. Compared to the same periods last year, consolidated net sales decreased 5.9 percent to $1.60 billion in the quarter and 11.1 percent to $7.09 billion in the year due primarily to weak paint sales volume. Currency translation rate changes increased consolidated net sales 2.0 percent in the quarter and decreased consolidated net sales 1.3 percent in the year. Acquisitions were not significant to consolidated net sales in the quarter or year.
Diluted net income per common share increased 38.1 percent to $.58 per share in the quarter from $.42 per share in the fourth quarter 2008 and decreased 5.5 percent to $3.78 per share in the year from $4.00 per share in 2008. Asset impairment charges and a loss on dissolution of a foreign subsidiary in the fourth quarter of 2009 reduced diluted net income per common share approximately $.13 per share. Asset impairment charges reduced diluted net income per common share $.18 per share in the fourth quarter 2008 and $.31 per share in the year 2008. Acquisitions and currency translation rate changes, net, increased 2009 diluted net income per common share by $.02 per share in the quarter and, combined, reduced diluted net income per common share by $.04 in the year.
Net sales in the Paint Stores Group decreased 11.4 percent in the quarter to $920.2 million and 12.9 percent in the year to $4.21 billion due primarily to decreased paint volume sales. Net sales from stores open for more than 12 calendar months decreased 11.4 percent in the quarter and 12.9 percent in the year. Paint Stores Group segment profit increased 5.9 percent in the quarter due primarily to reduced selling, general and administrative expense, and lower asset impairment charges that more than offset the effect of the decline in paint volume sales. Segment profit decreased 7.4 percent in the year due primarily to the effect of lower paint volume sales partially offset by improved gross profit margins, reductions in selling, general and administrative expense, and reduced asset impairment charges.
Net sales of the Consumer Group decreased 2.2 percent to $240.1 million in the quarter and 3.7 percent to $1.23 billion in the year. The sales declines were due primarily to lower volume sales to most of the Group’s retail customers. Consumer Group segment profit decreased $7.7 million in the quarter due primarily to the effect of lower volume sales partially offset by reduced asset impairment charges. Segment profit increased 12.2 percent in the year due primarily to good cost control, reduced asset impairment charges, and favorable freight and other distribution costs that were partially offset by lower fixed cost absorption from decreased manufacturing and distribution volume.
Net sales of the Global Finishes Group increased 5.5 percent to $437.1 million in the quarter when stated in U.S. dollars due primarily to favorable currency translation rate changes. Net sales decreased 11.4 percent in the year to $1.65 billion when stated in U.S. dollars due primarily to lower paint sales volume and unfavorable currency translation rate changes that were partially offset by acquisitions and selling price increases. Acquisitions increased this group’s net sales in U.S. dollars by 0.7 percent in the quarter and 1.5 percent in the year.
Commenting on the financial results, Christopher M. Connor, Chairman and Chief Executive Officer, said, “While we are disappointed that our full-year sales and earnings fell short of the prior year, we are encouraged by our earnings performance in the last half of the year resulting primarily from the appropriate steps taken by our operating segments to control costs and improve efficiencies. We are beginning to see some stability in our sales to certain market segments, although demand in most end markets remains weak and industry-wide volume is down significantly from peak levels achieved a few years ago. We continue to focus on volume growth opportunities, primarily through share gain, by capitalizing on our controlled distribution network and strong brands.”
Looking forward, Connor said, “We anticipate that the stabilization we are beginning to experience in some segments of the U.S. and global economies will continue, although not at a sufficient pace to offset continued softness in many other areas of the global economy. Therefore, in the first quarter of 2010, we anticipate that consolidated net sales will be flat to down slightly versus the first quarter of 2009. At that anticipated sales level, we estimate diluted net income per common share in the first quarter of 2010 will be in the range of $.30 to $.40 per share compared to $.32 per share earned in the first quarter of 2009. For the full-year 2010, we expect consolidated net sales to increase above 2009 levels by a low-to-middle single-digit percentage. With annual sales at that level, we anticipate diluted net income per common share for 2010 will be in the range of $4.05 to $4.45 per share compared to $3.78 per share earned in 2009.”