US winter weather to drag RPM’s earnings in current quarter

HOUSTON (ICIS)–RPM International warned on Tuesday that the winter weather will drag down its earnings during the current quarter, the CEO of the US-based coatings, sealants and adhesives producer said on Tuesday.

A lot of RPM’s products are used in construction, so cold weather delays these projects. Moreover, the company serves as a bellwether for chemicals used to make coatings, adhesives, sealants and other building materials.

The recent cold spell marks the return to normal winter weather after two previous seasons of above normal temperatures, said Frank Sullivan, CEO. He made his comments during an earnings conference call.

“We are facing a real winter compared to mild conditions in the prior year,” he said. “This is putting pressure on some of our businesses, particularly in the consumer segment.”

The return of winter interrupted the return to volume growth for RPM’s segments, Sullivan said. When temperatures rise in the spring, he expects strong growth will return to those segments.

RPM MAINTAINS SALES GUIDANCE FOR FISCAL YEAR
Despite the delays caused by colder temperatures, RPM maintained its sales guidance for its fiscal year, which runs through July.

Sales should rise by the low single digits.

Adjusted earnings before interest and tax (EBIT) should rise 6-10%. That compares with an earlier guidance of growth in the mid-single digits to the low double digits.

RPM shares were up by more than 2% in midday trading.

COLD WEATHER MAY DELAY OTHER BUILDING MATERIALS
Cold weather could delay purchases for other building materials such as paints, coatings, adhesives and sealants as well as pipes and siding made of polyvinyl chloride (PVC).

Paints and coatings are important end markets for many petrochemicals and resins.

Titanium dioxide (TiO2) is used as a white pigment and to make paints opaque.

Solvents used in paints and coatings include ethyl acetate (etac), butyl acetate (butac) and methyl ethyl ketone (MEK).

Polyurethane coatings are made with polyols and isocyanates such as methyl diphenyl diisocyanate (MDI). Acrylic based coatings are made with methyl methacrylate (MMA), and epoxy coatings are made with epoxy resins.

Other chemicals used in paints and coatings include isopropanol (IPA) and vinyl acetate monomer (VAM).

NO CHEM DISRUPTIONS ON US GULF
So far, there have been no reports of cold weather causing disruptions to chemical plants.

Temperatures in Houston had briefly fell to freezing during the night, but the region has yet to suffer from prolonged low temperatures that have typically led to plant shutdowns or power outages.

Also, many producers made their plants more resilient to cold weather following winter storm Uri in 2021.

EARLIER FORECASTS CALLED FOR WARM WINTER PUNCTUATED WITH COLD SPELLS
Meteorologists had forecast that the upcoming winter season will be warmer than normal, with spells of especially frigid weather.

Such forecasts held true in the US Gulf Coast during the past two winter seasons. Each winter had a brief spell of freezing temperatures that caused some chemical plants to shut down.

Focus article by Al Greenwood

Thumbnail shows construction. Image by Costfoto/NurPhoto/Shutterstock