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Natural disasters and higher raw materials prices weigh on Axalta’s full-year outlook

The paint specialist now expects underlying earnings to come in at between US$870-US$890mln this year, on revenues of between US$1.08-US$1.1bn
car paint
Net sales are now expected to grow by between 6-7% to between US$1.08-US$1.1bn this year

Axalta Coating Systems Ltd (NYSE:AXTA) opened in the red on Monday after the paint specialist trimmed its full-year sales growth and adjusted underlying earnings guidance.

Underlying earnings (EBITDA) are now expected to come in at between US$870-US$890mln in 2017, while full-year net sales are expected to grow by between 6-7% to between US$1.08-US$1.1bn.

Only in August Axalta told investors it expected sales growth of 7-8% and adjusted underlying earnings of between US$940-US$970mln.

The Philadelphia-based said several reasons were to blame for the weaker outlook, including higher raw material prices and the impact of the recent natural disasters.

“We have seen and expect moderate effects on our business from recent hurricanes and the earthquake in Mexico, largely in terms of lost near-term volume opportunity,” said chairman and chief executive Charles Shaver.

“We believe that much of this impact will be made up during the course of 2018, and hence see these impacts as largely transitory.”

He added: “We also continue to see impacts across coatings markets from tight supply conditions for raw material inputs, and given time lags to recovery via pricing adjustments, we have factored in a wider price-cost gap into our 2017 outlook.

“We expect to close the gap caused by raw material price pressure over the coming year.”

The stock was down 4.5% to US$29.16 on Monday morning.

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