Economic Uncertainty Weighs on Sherwin-Williams’ Profit Forecast
As the global economy continues to navigate uncertain waters, paint maker Sherwin-Williams has become the latest casualty, forecasting adjusted profits for the current year that fall short of analysts’ expectations. The company’s CEO, Heidi Petz, attributes this decline to persistent demand softness in several end markets, which is expected to linger well into the second half of the year and potentially even into 2026.
Factory Activity Slows Down
The US factory sector ended 2024 on a weak note, with expectations for the new year dampened by growing trade risks and China’s fragile economic recovery. This slowdown has had a ripple effect on the chemical industry, which is struggling to recover from sluggish demand. As a result, prices have dropped, particularly in Europe, where a challenging regulatory landscape has forced companies to reassess their strategies.
Sherwin-Williams’ Q4 Performance
Despite the gloomy outlook, Sherwin-Williams posted an adjusted profit of $2.09 per share for the fourth quarter, beating estimates of $2.06 per share. This was largely driven by higher sales at its paint stores unit, which saw a 3.4% increase in net sales to $3.04 billion during the reported period.
Full-Year Profit Guidance Disappoints
However, the company’s full-year adjusted profit guidance of $11.65 per share to $12.05 per share fell far short of Wall Street expectations of $12.60 per share. This news initially sent shares tumbling, but they eventually rebounded, rising 2% by late morning.
Analysts Weigh In
Barclays analyst Michael Leithead expects initial stock weakness due to the full-year guide miss, but believes shares will eventually recover as investors point to the company’s initial conservatism and reputation for quality in a weak materials sector.
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