Sherwin-Williams earnings down 15 percent
Sherwin-Williams saw earnings fall in the second quarter, factoring in a difficult commodities market, while sales rose slightly.
Earnings fell 15.3 percent in the second quarter to $171.7 million from $202.6 million in the same period last year. Net sales grew just over 1.4 percent to $2.23 billion from $2.2 billion in the same period last year.
In the company’s retail Paint Stores Group, net sales were $1.355 billion in the quarter, 0.8 percent lower than in last year’s second quarter. Earnings fell 11.6 percent to $210.4 million, due to a one-time charge of $20.4 million related to the acquisition of certain trademarks, as well as “pressures caused by increasing product and freight costs.”
Same-store sales decreased 4.5 percent compared with last year in the Paint Stores Group.
The company’s Consumer Group, which includes paint and coatings products under brands such as Dutch Boy, saw sales decrease 3.2 percent in the quarter to $383.9 million. The sales decline was due primarily “to soft DIY demand at most of the group’s retail customers.”
Earnings in the Consumer Group were down 28.8 percent to $58.8 million. “Segment profit decreased due primarily to dramatic increases in raw material costs,” the company noted.
The Global Group’s net sales increased 12.6 percent to $488.9 million due to market volume gains, selling price increases, favorable currency translation and acquisitions. Earnings for the Global Group decreased 1.7 percent to $48 million.
“We continue to manage through an unprecedented downturn in the U.S. housing market that is both deep and wide,” said Christopher Connor, CEO and chairman of Sherwin-Williams, in a statement. “This downturn has severely depressed paint demand in the domestic new residential, residential repaint, DIY and commercial markets. Our Consumer Group faces the same market softness and has been coping with the extraordinary dynamics of rapid raw material cost increases.”
Connor noted that in the first six months of this year, the Paint Stores Group opened 39 and closed 62 stores — by year-end, the company will have opened approximately 100 stores and closed 80, he said.
Builder confidence hits record low
Builder confidence in the market for newly built single-family homes fell to a record low of 16 in July, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It was the third consecutive month the index declined, and the 16 replaced the previous record low of 18 in June.
The index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either “good,” “fair” or “poor.”
The HMI’s three components also hit record lows in July. The index gauging current sales conditions declined one point to 16; the index gauging sales expectations in the next months fell four points to 23, and the index gauging traffic of prospective buyers also receded four points to 12.
“Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months,” said NAHB Chief Economist David Seiders.
All but one region showed declines in builder confidence in July. The Midwest declined 6 points to 10, its lowest HMI score since the regional detail was introduced in December of 2004, while the West matched a record low set in January 2008 with its three-point decline to 13. The South posted a one-point decline to 20. The Northeast was the only region to post a gain in July, rising two points to 14 from the previous month’s record low of 12.
NAHB president Sandy Dunn, a home builder from Point Pleasant, W.Va., advocated on behalf of the trade group for several additional reforms to help stimulate the housing market – namely, Congressional action on a housing bill that would provide a temporary tax credit of up to $8,000 for first-time home buyers, with the aim of “helping to stimulate sales, reduce the inventory of unsold homes on the market, stabilize house prices and arrest the rapid deterioration of mortgage credit quality.”
Universal Forest Products names new director
Universal Forest Products has named Bill Payne to its board of directors, effective April 2009, to replace outgoing board chairman emeritus Peter Secchia, who will retire next year.
Payne currently serves as chief of staff for Alticor Inc.; he formerly worked in sales and marketing at the company’s Amway Corp. branch.
“He brings well-cultivated business skills, a strong aptitude for strategy and an understanding of our company, business and culture,” said UFP executive chairman William Currie in a statement.
As chief of staff for Alticor, the parent company of Amway Corp., Quixtar North America / Amway Global Inc., Access Business Group LLC and Alticor Corporate Enterprises, Payne works with Alticor’s office of the CEO “on priority projects and oversees day-to-day management of the global Alticor enterprise,” according to a statement.
Universal Forest Products markets, manufactures and engineers wood and wood-alternative products for a number of home building and home improvement applications.