Sherwin-Williams 3Q profit flat, cuts forecast

AP News
Posted: Oct 26, 2010 4:47 PM
Sherwin-Williams 3Q profit flat, cuts forecast

Paint maker and retailer Sherwin-Williams Co. posted flat earnings for the third quarter on Tuesday as an 8.8 percent increase in revenue was offset by higher raw materials costs.

Its shares fell 3.5 percent as the earnings missed Wall Street expectations and the company cut its earnings forecast for the fourth quarter.

Chairman and CEO Christopher M. Connor said the timing of price increases also headed off an earnings improvement that might have resulted as house painting contractors and do-it-yourself jobs drove up revenue in the third quarter.

"We remain cautiously optimistic about the stability of end market demand and are working hard to mitigate the effect of rising raw material costs," Connor said.

Connor underscored the issue in a conference call with analysts. "Raw materials remain a challenge for the foreseeable future," he said.

He also told analysts that the company's outlook faces challenges from the impact of acquisitions and rising sales-administrative expenses.

The Cleveland-based company reported net income of $175.3 million, or $1.60 per share, for the three months ended Sept. 30. It earned $175.2 million, or $1.51 a share, a year ago.

Revenue rose to $2.17 billion from $2 billion a year earlier.

Analysts expected higher earnings of $1.68 a share on revenue of $2.17 billion.

The company cut its per-share earnings outlook for the year to a range of $4.12-$4.22, down from its July outlook of $4.12-$4.52. Analysts expected annual per-share earnings of $4.58.

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Its shares closed down $2.62 at $71.95 after falling as low as $69.56 earlier in the session.

For the first nine months of this year, Sherwin-Williams reported net income of $389 million, or $3.53 per share, on revenue of $5.9 billion. A year ago, it reported net income of $370 million, or $3.17 per share, on revenue of $5.5 billion.

Connor forecast a sales increase in the mid-teens compared to the fourth quarter of 2009.

Sherwin-Williams operates more than 3,500 stores and facilities and sells products under its name and the Dutch Boy, Krylon and Minwax labels.