By Lisa Beilfuss
Coatings and paints company Valspar Corp. said Wednesday that
profit in its latest quarter rose 5%, as cost-saving initiatives in
its coatings business offset sales weakness.
Chief Executive Gary Hendrickson called the results in-line with
Valspar's expectations, "despite the negative impact of currency
translation and the expected volume decline in our paints segment
in North America."
The Minneapolis-based company affirmed its full-year outlook
after cutting its sales view in February, expecting $4.45 to $4.65
in per-share earnings and sales growth in the low-single digits.
Analysts, according to Thomson Reuters, project $4.60 in earnings
per share on $4.5 billion in sales.
Meanwhile, larger rival Sherwin-Williams Co. recently issued
upside guidance for the current quarter and backed its full-year
outlook. The Cleveland paint producer has sought to improve its
results by focusing on the U.S. market as the housing market
recovers.
For Valspar, North America accounts for just over half of
overall revenue and weakness in the region drove a 15% decline in
total paint sales. A product line adjustment at a significant
customer contributed to the drop, the company said.
Paints segment adjusted earnings before interest and taxes fell
17%, driven by the volume decline in North America.
In Valspar's coatings unit, sales fell 1% to $6.15 million.
Currency-adjusted sales in the segment rose 5%. But earnings before
interest and taxes in the business rose 9% on account of
productivity initiatives and increased volume.
Separately on Wednesday, the company said it reached a deal to
acquire the performance coatings businesses of Quest Specialty
Chemicals. Valspar didn't disclose the terms of the deal but said
it would close during its July quarter.
Overall for the April quarter, Valspar reported a profit of
$90.3 million, or $1.09 a share, up from a year-earlier profit of
$86 million, or 99 cents.
Revenue fell 6.6% to $1.08 billion. Stripping out currency
effects, sales decreased 2%.
Analysts anticipated $1.10 in per-share earnings and $1.1
billion in sales.
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