Valspar profit tops $292M for year after loss in 2011

Factory improvements, sale of new products and a shift away from unprofitable customers helped paint giant Valspar Corp. move back into the black for its fiscal year and fourth quarter.

The Minneapolis-based company said Tuesday that its full-year profit climbed to $292.5 million, or $3.10 a share, from a loss of $139 million, or $1.47 a share, in fiscal 2011. Fourth-quarter earnings reached $73.8 million, or 79 cents a share, compared with a $295 million loss for the same quarter a year ago.

Valspar attributed results to higher pricing and strong demand for its new protective coatings used on packaging, shipping containers, wood and pipes. It also dropped unprofitable customers and products during the quarter.

"We overcame the challenge of uneven global markets by winning significant new business and through a relentless focus on productivity," CEO Gary Hendrickson said in a conference call with analysts. "We continued to invest in our brands and innovative technology to secure long-term growth."

The results, which beat analysts' earnings estimates, come after a turbulent 2011 spent restructuring and reevaluating retail paint operations in Australia and New Zealand.

For fiscal 2012, Valspar saw sales grow 2 percent to $4.02 billion. Fourth-quarter sales dipped to $1.02 billion from $1.05 billion due to unfavorable foreign currency exchange rates.

For 2013, Hendrickson expects "uneven global demand to continue," but said Valspar's coatings and paint sales are still poised for growth, thanks to a pipeline of new products.

The guidance does not include the effect of Valspar's new partnership with British retailer B&Q. That deal will let B&Q sell Valspar paint in 350 of its home improvement stores in the United Kingdom and Ireland. Sales are expected to begin affecting results after 2013, Hendrickson said.

For fourth quarter 2012, revenue from key segments was mixed.

Coatings sales rose to $571.5 million from $566 million for the same period a year ago. But paint revenue slid to $396 million from $416 million during the quarter as the company worked to find the right retail mix for stores in Australia.