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Sherwin-Williams Co. lowered its fiscal-year earnings guidance in preparation to buy fellow paint maker Valspar Corp., and as it posted second-quarter results in line with expectations.

The company said it now expects $11.65 to $11.85 in per-share earnings for 2016. In April, Sherwin-Williams had forecast $12.50 to $12.70. Sherwin said the new numbers reflect its acquisition of Valspar, a consumer-focused paint maker that distributes its products through home-improvement chain stores such as Lowe's Co. and Ace Hardware.

Valspar shareholders late last month approved the company's sale to Sherwin-Williams for more than $9 billion—Sherwin's biggest acquisition ever.

Sherwin-Williams also said it expects to earn $4.10 to $4.30 a share in the current quarter, including 20 cents of acquisition-related costs and 10 cents of tax benefits. Analysts surveyed by Thomson Reuters are forecasting per-share earnings of $4.41 on revenue of $3.32 billion.

Sherwin reported that sales for stores open for more than 12 months increased 5.2% in the quarter compared with last year. The company said performance in its paint stores and global-finishes segments helped its bottom line.

Over all, Sherwin posted a profit of $378.1 million, or $3.99 a share, up from a profit of $349.9 million, or $3.70 a share, a year prior. Revenue rose 2.8% to $3.22 billion.

In April, the paint retailer said it was expecting $3.95 to $4.15 a share on revenue of $2.19 billion to $3.29 billion.

Sales in paint stores grew 6.2% to $2.11 billion, due to higher volume of architectural paint sales. The segment's profit rose to $509 million from $433.4 million last year.

The company's consumer segment saw a 2.6% decline in sales to $477.5 million. Sherwin blamed the decline on the past year's initial shipment of its HGTV Home by Sherwin-Williams paint to Lowe's stores. The segment's profit fell to $108.3 million from $114.2 million a year earlier.

Global finishes sales in U.S. dollars fell 1.3% to $499.2 million. Unfavorable currency rates pushed net sales down 2.6% in the quarter. In its Latin America coatings segment, sales in U.S. dollars fell 11.2% to $133.3 million in the quarter, partially due to unfavorable exchange rates. The segment posted a loss of $9.6 million us dollars compared with a profit of $4 million a year ago.

Shares of Sherwin-Williams fell 5.2% in light premarket trading.

(END) Dow Jones Newswires

July 21, 2016 09:35 ET (13:35 GMT)

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