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Sherwin-Williams Falls on Cutting Guidance as Material Supplies, Inflation Hurt By Investing.com

by Mike Robinson

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© Reuters.

By Dhirendra Tripathi

Investing.com – Sherwin-Williams (NYSE:) stock fell nearly 1% Wednesday after supply chain challenges and pricier raw materials forced the company to lower its guidance for the current quarter as well as the financial year.

It was warned by the company that its net sales for the current quarter might even be lower than last year. At best, they would be flat, according to the company’s revised guidance.

For the full year, it sees net sales up by around 9% compared to a “high-single to low-double digit percentage” rise it expected in July.

Although the company experienced price rises during the second quarter, Chief Executive Officer John G. Morikis did not rule out any further increases at the time that they provided previous guidance. But the scenario has worsened and Morikis, in a note Tuesday, said “Morikis said Tuesday that the situation has deteriorated and that he did not expect to see an improvement in supply or lower raw material pricing for his fourth quarter. . .we do not expect to see improved supply or lower raw material pricing in our fourth quarter as anticipated”.

The company stated that Hurricane Ida had a greater impact than expected and it will continue to affect the supply of raw materials for the fourth quarter. Production of many key resins, solvents and additives was halted. They are expected to resume production in late September. The company expressed confidence in recovering “majority of sales” over future quarters.

Sherwin Williams isn’t the only one facing supply chain challenges and shortages of raw materials. From Apple (NASDAQ:) to Nike (NYSE:), manufacturers are facing shortage of raw materials as supplies from China and Vietnam remain disturbed due to the pandemic and power shortages.

Sherwin-Williams announced the acquisition of Specialty Polymers. This company is a supplier to the firm and manufactures water-based polymers for industrial and architectural coatings. For the year ended December 31, 2019, the revenue was $112 million. This transaction should close by 2021.

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