By Dhirendra Tripathi
Investing.com – Sherwin-Williams (NYSE:SHW) 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.
The company warned that its consolidated net sales in the current quarter could even fall below 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.
The company had taken price increases during the second and Chief Executive Officer John G. Morikis had not ruled out further hikes at the time they gave the previous guidance. But the scenario has worsened and Morikis, in a note Tuesday, said “. . .we do not expect to see improved supply or lower raw material pricing in our fourth quarter as anticipated”.
The company said the hit from Hurricane Ida has been more severe and will be longer lasting than initially thought. Production of several key resins, additives and solvents, expected to resume by late September, has been pushed out. The company expressed confidence in recovering “majority of sales” over future quarters.
Sherwin-Williams is not alone in experiencing supply chain and raw material challenges. From Apple (NASDAQ:AAPL) to Nike (NYSE:NKE), manufacturers are facing shortage of raw materials as supplies from China and Vietnam remain disturbed due to the pandemic and power shortages.
In other developments at the company, Sherwin-Williams said it will acquire Specialty Polymers, a supplier to the company and a manufacturer of water-based polymers used in architectural and industrial coatings. Revenue for the business was approximately $112 million for the year ended December 31, 2020. The transaction is expected to close by the end of 2021.