Sherwin-Williams’ financial results announced for the second quarter 2022 show consolidated net sales increased 9.2 per cent to US$5.87 billion. The rise was primarily due to selling price increases in all segments, higher professional architectural sales volume in North America paint stores and higher sales volumes in the company’s packaging and coil businesses.
The increases were partially offset by lower protective and marine sales volume in North America paint stores and lower sales volumes outside of North America in the Consumer Brands and Performance Coatings Groups mainly due to “challenging prior year comparisons”. Currency translation rate changes decreased consolidated net sales by 1.4 per cent.
Income before income taxes decreased due to higher raw material costs and other input costs, primarily in The Americas Group and the Consumer Brands Group, and lower sales volume in the Consumer Brands Group, partially offset by selling price increases in all three operating segments.
Sherwin-Williams generated US$639.7 million in net operating cash during the first six months of 2022, which along with an increase in short-term borrowings, allowed the company to repay US$260.2 million in long-term debt, and close an acquisition.
“Demand remained strong during the second quarter in The Americas Group and the Performance Coatings Group, as both groups delivered sales within our guidance,” said John Morikis, Chairman and Chief Executive Officer at Sherwin-Williams.
“Consolidated gross margin improved sequentially, but at a slower pace than anticipated. Segment profit improved sequentially in The Americas Group as well as in the Performance Coatings Group, where margin also improved on a year-over-year basis.
“At the same time, we are disappointed in our weaker-than-expected earnings results in the quarter, which were primarily related to the lower-than-expected sales in the Consumer Brands Group and the Europe and Asia Pacific regions in the Performance Coatings Group, raw material costs that have not yet moderated despite sequential deflation of feedstock costs, and supply chain inefficiencies incurred in serving our customers. We are taking aggressive actions throughout the second half of the year in response to these challenges.”
Morikis said Sherwin-Williams expects third quarter 2022 consolidated net sales to increase by a low- to mid-teens percentage compared to the same period a year ago.
“We are responding aggressively to inflationary pressures by implementing a 10 per cent price increase in The Americas Group effective September 6th, with significant additional pricing actions being taken in our other two operating segments. We will manage our expenses tightly in the second half with the slowdown in market demand in certain regions and businesses.
“However, we will continue to invest in growth, including stores, sales representatives and innovative products. We remain highly confident in our strategy, our people, and our ability to emerge as an even stronger company following the current near-term pressures,” Morikis said.