- 25 April 2008 -
Chemical, Paint Suppliers Report
First-Quarter Earnings

DuPont, Rohm & Haas, Co., Sherwin Williams, and PPG were among the market leaders reporting first-quarter earnings. Here's how things shook out:

DuPont said first-quarter profit rose a stronger-than-expected 26%, with higher revenue driven by the blue chip's agriculture and nutrition segment. The Wilmington, Del.–based company, which has interests in chemicals, agribusiness, construction, communications, and transportation, said profits reached $1.19 billion, or $1.31 a share, from $945 million, or $1.01 a share, earned in the previous year's first quarter.

Revenue rose 7%, reaching $8.77 billion from $8.16 billion. Net sales rose 9% to $8.58 billion from $7.85 billion.

Specialty chemicals and electronic materials maker Rohm & Haas Co. said its first-quarter net profit fell, hurt by weak results from its paint and coatings and primary materials businesses. Net income in the quarter was $172 million, or $0.87 a share, compared with a year-ago profit of $192 million. The company had fewer shares outstanding in the latest quarter, as compared to a year earlier.

Excluding items, the company posted earnings from continuing operations of $180 million, or $0.91 a share, down from $189 million, or $0.86 a share. The company said it plans to look for acquisitions in paint and coatings, electronic materials, and other niche areas to broaden its technology portfolio and product line.

Paint maker Sherwin-Williams Co. reported a 30% drop in its first-quarter profit as a weak housing market hurt its domestic sales. The Cleveland, Ohio–based company posted first-quarter net income of $77.95 million or $0.64 per share, lower than $111.80 million, or $0.83 per share, in the same quarter last year.

Last month, Sherwin-Williams cut its first-quarter earnings forecast to a range of $0.56–$0.61 per share from an earlier outlook of $0.72–$0.80 per share. The current quarter earnings results came in better than the company's revised expectations. However, on a sequential basis, the company's first-quarter profit fell from earnings of $100.8 million, or $0.80 per share, reported in its fourth quarter.

“Paint demand in the domestic new residential, residential repaint, DIY, and commercial markets was weaker during the first quarter than we had anticipated at the start of the year,” said Christopher Connor, CEO. Gross profit for the first quarter declined to $780.51 million, or 43.8% as a percent to net sales, from $791.37 million, or 45.1% as a percent to net sales, in the first quarter of 2007. Cost of goods sold increased to $1 billion from $964.81 million a year ago.

Net sales in the Paint Stores Group declined 1.9% to $1.031 billion, hit by soft architectural paint sales and weak sales in non-paint categories. During the quarter, net sales from stores open for more than 12 calendar months decreased 6.5%. Consequently, Paint Stores Group segment profit fell 31.9%, to $83.3 million, on lower net sales and gross margin pressures caused by increasing product and freight costs.

In the Consumer Group, net sales contracted 4.8% to $286.9 million, hurt by soft DIY demand. As a result, segment profits of the Consumer Group decreased 23.7%, to $42.8 million, in the quarter. Segment profit decreased as a percent to net sales to 14.9%, from 18.6% last year, due to the timing and severity of raw material cost increases and lower volume throughput in its manufacturing and distribution operations.

Meanwhile, the Global Group's quarterly net sales improved 14.8% to $461.9 million, benefited by volume gains, selling price increases, currency translation impact, and acquisitions. Favorable currency translation rate changes increased net sales of the Global Group by 6.9% in the quarter, and acquisitions boosted net sales in U.S. dollars by 3.7%. Segment profit of the Global Group for the quarter improved $7.7 million, or 21.7%, and increased as a percent to net sales to 9.3% from 8.8% last year.

PPG Industries reported record sales for the first quarter of $3.7 billion, surpassing the prior year’s first-quarter results by 41%. Performance Coatings segment sales in the first quarter increased $259 million, or 30 %, as a result of the SigmaKalon and Barloworld acquisitions, the positive impact of stronger foreign currencies, increased selling prices, and improved volumes. Industrial Coatings segment sales for the quarter increased $189 million, or 22 %, as a result of the SigmaKalon acquisition, stronger foreign currencies, and improved volumes in all businesses. The segment experienced volume declines in North America that were more than offset by improved volumes in all other regions.

At the same time, PPG, which supplies of coatings, glass, and chemical products, reported a lower first-quarter net income of $100 million, or $0.61 per share, compared to $194 million, or $1.17 per share, a year ago.