Rising costs take sheen off Sherwin-Williams outlook
(Reuters) - Sherwin-Williams Co (SHW.N) forecast third-quarter and full-year profit that could fall short of Wall Street expectations, as rising costs of raw materials begin to squeeze paint makers.
Shares of the top U.S. paint maker fell as much as 4 percent in early trade. They are still up 84 percent since hitting a year-low in August, as the company has so far been able to raise prices to offset higher costs.
Earlier in the day, AkzoNobel NV (AKZO.AS), the world's largest paint maker and owner of the Dulux brand, warned of a tough economic environment ahead and continuing high costs for raw materials.
Prices of such raw materials such as titanium dioxide and oil-related resins and solvents are expected to increase further this year, the Dutch firm said.
Sherwin-Williams, which markets brands such as Dutch Boy, Krylon, Minwax and Water Seal, raised its full-year profit forecast to between $6.20 and $6.40 per share from $5.75 to $6.05 per share it had estimated earlier.
However, the raised full-year outlook could still miss Wall Street expectations of $6.29 per share by as much as 9 cents.
The company's third-quarter profit forecast of $2.05 to $2.20 per share could also miss analyst expectations by 10 cents.
Net income for the second quarter rose to $227.8 million, or $2.17 per share, from $179.1 million, or $1.66 per share, a year earlier.
Sherwin-Williams, which caters to do-it-yourself (DIY) customers, contractors, as well as multinational industrial manufacturers, said sales rose 9.3 percent to $2.57 billion in the quarter.
Analysts on average expected the company to earn $2.13 per share on revenue of $2.67 billion, according to Thomson Reuters I/B/E/S.
Shares of the company were down 3 percent at $124.01 in late morning trading on Thursday on the New York Stock Exchange.
(Reporting by Arpita Mukherjee in Bangalore; Editing by Rodney Joyce and Saumyadeb Chakrabarty)
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