PAINTMAKER Sherwin-Williams on Tuesday forecast mid-single-digit sales growth for the second quarter, banking on price increases and contributions from recent acquisitions, even as demand remained soft across most end markets.
The Middle East conflict, which led to supply chain disruptions, has pushed up costs for raw materials, energy and logistics, prompting companies such as Sherwin-Williams to raise product prices to protect their margins.
"We would expect to see these inflating costs impacting us more materially as we move through the second quarter and into the second half of the year," CEO Heidi Petz said on a conference call.
The war in Iran and the effective closure of the Strait of Hormuz have tightened global chemicals supply, forcing Sherwin-Williams and other paints and chemicals makers to implement price hikes.
"We are continuing to implement targeted price increases by end market and geography across all of our businesses," Petz said, adding that the firm would try to limit the price increases through cost reductions.
However, the company expects continued volatility in raw material prices and said it was prepared to implement additional increases if necessary.
Analysts expect Sherwin-Williams to post net sales of $6.58 billion in the second quarter, according to data compiled by LSEG.
Sherwin-Williams' shares were down 2 percent.
The company beat first-quarter profit estimates, driven by higher sales across all business units. Total revenue rose 7 percent to $5.66 billion during the quarter, topping analysts' estimate of $5.56 billion.
Its paint stores unit posted a 3.7 percent rise in sales amid higher prices. Quarterly sales in the consumer brands unit rose 19.2 percent from a year ago, posting the highest percentage gain on the back of last year's Suvinil deal and strength in Europe.
Sherwin-Williams posted an adjusted profit of $2.35 per share during the quarter, compared with estimates of $2.26 per share.
