Cleveland, OH, Apr. 29--The Sherwin-Williams Company announced its financial results for the first quarter ended March 31, 2004. Consolidated net sales increased $171.1 million, or 14.9%, to $1.320 billion in the first quarter of 2004. The sales gain in the first quarter was due primarily to continuing strong domestic architectural paint sales and improving sales and market conditions in domestic industrial maintenance, product finishes and automotive markets.
Also, consolidated net sales for the first quarter of 2004 compare positively to last year sales due in part to the adverse impact on sales of harsh weather conditions in parts of the U.S. in the first quarter of 2003 and by a soft domestic economic environment throughout most of 2003. Net income increased $20.7 million, or 67.1 percent, to $51.5 million in the first quarter of 2004. Diluted net income per common share for the first quarter of 2004 was $.35 per share compared to $.21 per share in 2003.
Net sales in the Paint Stores Segment increased $87.4 million, or 12.2%, to $803.7 million in the first quarter of 2004 due primarily to continuing strong domestic architectural paint sales to contractor and do-it-yourself (DIY) customers. Industrial maintenance and product finishes sales improved during the quarter as the domestic economic environment continued to strengthen compared to a soft domestic economic environment during the first three quarters of 2003. During the first quarter, net sales from stores open for more than twelve calendar months increased 11.0% over last year's first quarter. The Paint Stores Segment operating profit increased $22.6 million, or 75.4%, to $52.5 million during the first three months of 2004. The operating profit increased as a percent of sales from 4.2% to 6.5% due primarily to the favorable impact on gross margins of increased architectural paint sales volume. Flat year-over-year utility costs and pension expense along with tight control of other expenses reduced selling, general and administrative expenses as a percent of sales.
Net sales of the Consumer Segment in the first quarter increased $51.0 million, or 19.2%, to $317.2 million. The sales improvement was due primarily to new product introductions, new customers and acquisitions. In addition, 2004 first quarter sales compared favorably to last year due to the adverse impact on sales in 2003 by changes in the ordering or promotional patterns by some of the Segment's largest retail customers, the preparation for store closings by a major retailer, the impact of harsh weather and stringent inventory control relating to the slow domestic economy. Operating profit of this Segment improved $10.1 million, or 25.9%, to $49.2 million in the quarter, increasing as a percent of net external sales to 15.5% from 14.7% last year. This improvement, in spite of raw material cost increases along with some incremental spending related to new product launches and new customers, was due primarily to favorable manufacturing absorption related to manufacturing volume increases. Tight spending control, combined with flat year-over-year utility costs and pension expense, reduced selling, general and administrative expenses as a percent of sales.
Net sales in the International Coatings Segment increased $18.6 million, or 32.1%, to $76.4 million in the first three months of 2004. A strong 11.1% sales increase in the first quarter was enhanced by the impact of favorable currency exchange rates that further increased sales in U.S. dollars by 21.0%. The sales increase was due primarily to volume gains in the United Kingdom and South America. The International Coatings Segment realized an operating profit in the first quarter of 2004 of $4.7 million compared to an operating loss in the first quarter of 2003 of $0.3 million. This improvement in the operating profit from last year was due primarily to the sales gain, operating efficiencies related to additional manufacturing volume and favorable currency exchange rates that positively affected gross margins as a result of purchasing many required raw materials on a U.S. dollar denominated basis. Tight expense control also contributed to the International Coatings Segment's operating profit improvement.
At March 31, 2004, the company had $103.6 million in cash and cash equivalents, compared to $12.8 million at March 31, 2003. Total debt at March 31, 2004 of $513.5 million was $105.7 million below total debt at the same time a year ago primarily as a result of having no short-term borrowings. The company acquired 1,850,000 shares of its common stock through open market purchases during the first quarter of 2004 and had remaining authorization at March 31, 2004 to purchase 15,173,000 shares.
