RPM Recorded Growth Amidst Foreign Exchange Headwind
RPM International Inc. announced net sales of $1.25 billion and net income of $112.8 million for fiscal 2017 first-quarter ended August 31, up by 0.8 percent and 13 percent, respectively, compared to the same period last year, despite unfavorable movements in foreign exchange.
RPM owns hundreds of subsidiaries in manufacture coating, flooring and sealants industry. The company recorded positive growth across all three sectors, with 2.2 percent in the industrial segment, 5.5 percent in specialty segment and 2.8 percent in consumer segment. While a large portion of the company’s revenue comes from the industrial and consumer segments, which account for $675.8 million and $399.9 million respectively in net sales, they were both hit hard by the foreign exchange translation during the summer.
The strong dollar and the plunge of British Pounds have offset 2.4 percent of the industrial segment sales, resulting in a 0.2 percent decline, and dragged down 1.7 percent for the consumer segment. A bulk of the company’s consumer businesses in the Europe are U.K.-based, which were “severely impacted by the rapid decline of British Pounds versus U.S. dollars, resulting from the Brexit vote,” Chairman and CEO Frank C. Sullivan said. The specialty business in Europe also generated positive growth in local currency but translated negatively back into U.S. dollars.
While management expected the industrial segment in Europe to experience lackluster growth amid currency headwinds through 2017, the U.S. commercial construction business has experienced steady sales growth in the mid-single digit range, according to Sullivan. “We continue to feel positive that all of the economics that drive consumer segment in the U.S. continues to track in a favorable direction,” he added.
In addition, RPM announced a quarterly dividend of $0.30 per share, which increased 9.1 percent year-on-year. It is the company’s 43rd year in a row of paying increased cash dividends to stockholders.