- Record Q2 Sales Growth: Consolidated sales rose 3.5% to a record, driven by targeted investments, but momentum slowed due to construction delays, soft DIY demand, and a government shutdown.
- SG&A Cost Optimization: Actions to reduce SG&A expenses are projected to yield $100M annual savings, with $5M realized in Q3 and $20M in Q4, offsetting growth-related costs.
- Regional Growth Disparities: Europe led with M&A/ FX-driven growth, North America grew 2%, while emerging markets (Africa/Middle East) expanded due to strategic investments.
- Segment Performance: Construction Products Group achieved record sales but saw EBIT decline from SG&A investments; Performance Coatings Group posted broad-based sales growth.
- Kalzip Acquisition Impact: Acquisition of Kalzip (€75M in sales) expected to close in Q4 2026, with Q3-Q4 sales growth driven by organic gains and upcoming acquisitions.
Segment-wise Performance
The Construction Products Group achieved record sales, but adjusted EBIT declined due to SG&A growth investments and temporary inefficiencies. The Performance Coatings Group achieved record sales with broad-based growth, while the Consumer Group's sales grew driven by M&A and pricing, but adjusted EBIT declined due to lower volumes and temporary inefficiencies.
Geographic Performance
Europe was the fastest-growing region, driven by M&A and FX, while North America grew approximately 2% and emerging markets grew led by Africa and the Middle East. The company's geographic diversification helped mitigate the impact of the government shutdown.
Outlook and Guidance
The company expects consolidated sales to increase by mid-single digits in the third quarter and mid-single-digit range in the fourth quarter, with adjusted EBIT growth of mid- to high single digits in the third quarter and low to high single digits in the fourth quarter. Analysts estimate next year's revenue growth at 3.5%.
Valuation and Metrics
With a P/E Ratio of 20.34, P/B Ratio of 4.33, and EV/EBITDA of 14.73, the company's valuation multiples indicate a premium. The company's ROIC is 11.76%, and ROE is 22.7%, indicating a strong return on equity. The Net Debt / EBITDA ratio is 2.32, indicating a manageable debt level.
Acquisition and Strategic Plans
The company announced an agreement to acquire Kalzip, a German-based leader in metal-based roofing and facades, for approximately EUR 75 million in sales. The acquisition is expected to close in the fourth quarter of 2026. The company is undergoing an SG&A structural realignment, with a goal to reduce costs and reallocate resources to growth areas.