The Sherwin-Williams Company (SHW): Boston Consulting Group Matrix [10-2024 Updated]

The Sherwin-Williams Company (SHW) is navigating a complex landscape in 2024, characterized by distinct segments within its business portfolio, as highlighted by the Boston Consulting Group Matrix. This analysis reveals Stars like the Paint Stores Group, which is experiencing robust growth with a segment profit of $895.9 million in Q3 2024, while Cash Cows such as the Performance Coatings Group continue to generate steady profits despite flat net sales. Conversely, the Dogs category, represented by the Consumer Brands Group, is grappling with an 8.5% decline in net sales, impacted by weak DIY demand. Finally, the Question Marks showcase mixed results, particularly within the Performance Coatings Group, raising questions about future growth prospects. Read on to explore the dynamics of each segment in detail and what they mean for Sherwin-Williams' overall strategy.

Background of The Sherwin-Williams Company (SHW)

The Sherwin-Williams Company, founded in 1866, is a leading global manufacturer and distributor of paint, coatings, and related products. The company primarily serves professional, industrial, commercial, and retail customers across North and South America, with additional operations in the Caribbean, Europe, Asia, and Australia. As of 2024, Sherwin-Williams is structured into three reportable segments: the Paint Stores Group, Consumer Brands Group, and Performance Coatings Group, along with an Administrative function that supports its operations.

In the third quarter of 2024, Sherwin-Williams reported consolidated net sales of $6.163 billion, reflecting a year-over-year increase of 0.7%. The Paint Stores Group was a significant contributor, with net sales increasing by 3.2%, driven by low-single-digit sales volume growth and higher selling prices. However, the Consumer Brands Group experienced a decline of 7.5% in net sales, attributed to soft demand in the DIY segment in North America and adverse foreign currency translation effects.

For the first nine months of 2024, the company achieved total net sales of $17.801 billion, remaining essentially flat compared to the same period in 2023. This stability was a result of sales volume growth in the Paint Stores and Performance Coatings Groups, offset by declines in the Consumer Brands Group. The company’s diluted net income per share for the third quarter of 2024 increased by 7.8% to $3.18, compared to $2.95 in the same quarter of the previous year.

As of September 30, 2024, Sherwin-Williams maintained a strong financial condition with cash and cash equivalents of $238.2 million and total debt outstanding of $10.140 billion. The company's EBITDA for the first nine months of 2024 was reported at $3.616 billion, reflecting a 5.5% increase. Sherwin-Williams continues to invest in long-term growth strategies, including the construction of a new headquarters and research and development center, expected to be completed in 2025.

The Sherwin-Williams Company (SHW) - BCG Matrix: Stars

Paint Stores Group Showing Consistent Sales Growth

The Sherwin-Williams Company has demonstrated robust performance through its Paint Stores Group, which is a key component of its portfolio classified as a Star in the BCG Matrix. The Paint Stores Group has shown consistent sales growth, driven by strong market demand and effective pricing strategies.

Segment Profit of $895.9 Million in Q3 2024

In the third quarter of 2024, the Paint Stores Group reported a segment profit of $895.9 million. This figure underscores the profitability of the division and its critical role in the overall financial health of Sherwin-Williams.

Net Sales Increased by 3.2% in Q3 2024

Net sales for the Paint Stores Group increased by 3.2% in Q3 2024 compared to the previous year. This growth reflects the strong demand for paint products and the company's ability to leverage its market position effectively.

Strong Demand in Professional Customer Markets

The Paint Stores Group has experienced strong demand from professional customer markets, which has significantly contributed to its growth trajectory. This segment includes contractors and other professional users who rely on high-quality paint products for their projects.

Growth Driven by Residential Repaint and New Construction

Growth within the Paint Stores Group has been primarily driven by two key factors: residential repainting and new construction. The ongoing trend of homeowners investing in property improvement has bolstered sales in this category.

Continues to Realize Higher Selling Prices Implemented Earlier

The Paint Stores Group continues to benefit from higher selling prices that were implemented earlier in the year. This pricing strategy has allowed Sherwin-Williams to maintain its margins while responding to rising costs in raw materials and labor.

Financial Metric	Q3 2024 Value	Year-over-Year Growth
Segment Profit	$895.9 million	N/A
Net Sales Growth	3.2%	3.2%
Key Growth Drivers	Residential Repaint, New Construction	N/A
Market Demand	Professional Customer Markets	N/A
Price Increase Implementation	Earlier in 2024	N/A

The Sherwin-Williams Company (SHW) - BCG Matrix: Cash Cows

Performance Coatings Group generating steady profits.

The Performance Coatings Group of Sherwin-Williams has demonstrated resilience in generating steady profits, contributing significantly to the company's overall financial health.

Segment profit of $259.7 million in Q3 2024.

In the third quarter of 2024, the Performance Coatings Group reported a segment profit of $259.7 million, reflecting a 7.2% decrease compared to the previous year’s profit of $279.7 million.

Net sales effectively flat, showing resilience.

Net sales within the Performance Coatings Group were effectively flat, showing a decrease of 0.2%, amounting to $1.720 billion compared to $1.724 billion in Q3 2023.

Strong performance in industrial wood and coil sectors.

The industrial wood and coil sectors led the performance, contributing positively despite overall sales being flat. The overall performance was partially offset by unfavorable foreign currency translations.

Consistent cash flow supporting dividends and share repurchases.

The Performance Coatings Group has been a consistent source of cash flow, supporting dividends and share repurchases. In the first nine months of 2024, Sherwin-Williams returned $1.972 billion to shareholders through dividends and share repurchases.

Gross profit margin increased to 48.4% in the first nine months of 2024.

The gross profit margin for Sherwin-Williams increased to 48.4% for the first nine months of 2024, up from 46.1% in the same period of 2023, indicating improved operational efficiency.

Metric	Q3 2024	Q3 2023	Change
Segment Profit	$259.7 million	$279.7 million	-7.2%
Net Sales	$1.720 billion	$1.724 billion	-0.2%
Gross Profit Margin	48.4%	46.1%	+2.3%
Cash Returned to Shareholders	$1.972 billion	N/A	N/A

The Sherwin-Williams Company (SHW) - BCG Matrix: Dogs

Consumer Brands Group facing declining sales

The Consumer Brands Group has reported a significant decline in performance, with net sales down 8.5% in the first nine months of 2024 compared to the same period in 2023.

Net sales down 8.5% in the first nine months of 2024

Net sales for the Consumer Brands Group decreased from $2.673 billion in the first nine months of 2023 to $2.446 billion in 2024, reflecting a decline of $227.5 million.

Impacted by weak DIY demand in North America

The decline has been primarily attributed to soft DIY demand in North America, resulting in a mid-single-digit percentage sales volume decline.

Divestiture of non-core businesses affecting overall performance

The overall performance has also been impacted by the divestiture of the China architectural business and a non-core domestic aerosol business in the prior period.

Struggles with foreign currency translation losses

The Consumer Brands Group faced unfavorable impacts from foreign currency translation, which accounted for approximately 3.6% of the sales decline in the first nine months of 2024.

Margins under pressure, necessitating strategic reevaluation

The margins are under pressure due to the combination of declining sales and increased costs, necessitating a strategic reevaluation of the Consumer Brands Group's operations.

Metric	2024 (Nine Months)	2023 (Nine Months)	Change
Net Sales (in billions)	$2.446	$2.673	-$0.227
Percentage Change	-8.5%	N/A	N/A
Impact from Foreign Currency Translation	-3.6%	N/A	N/A

The Sherwin-Williams Company (SHW) - BCG Matrix: Question Marks

Performance Coatings Group with mixed results

As of September 30, 2024, the Performance Coatings Group reported net sales of $5.208 billion, a slight decrease of 0.4% compared to $5.229 billion in the same period in 2023. This decline was primarily due to unfavorable foreign currency translation and selling price decreases, which impacted net sales by a low-single-digit percentage. However, mid-single-digit sales volume growth, including the impact from the acquisition of SIC Holding GmbH, partially offset these declines.

Recent acquisition of SIC Holding GmbH impacting growth prospects

The acquisition of SIC Holding GmbH in 2023 is expected to enhance growth prospects within the Performance Coatings Group. This acquisition contributed positively to sales volume growth but was fully offset by unfavorable foreign currency translation rates.

Potential for growth in packaging and industrial sectors

The Performance Coatings Group has potential for growth in the packaging and industrial sectors, which are currently experiencing increased demand. Recent performance has been led by growth in Industrial Wood and Coil segments, indicating a robust market opportunity despite the challenges faced.

Need to address foreign currency translation challenges

Foreign currency translation has significantly impacted overall profitability. For the nine months ended September 30, 2024, foreign currency translation decreased diluted net income per share by $0.06. The company generated net external sales of consolidated foreign subsidiaries of $3.370 billion, slightly up from $3.342 billion in the prior year.

Competitive pressures in automotive refinish impacting profitability

Competitive pressures in the automotive refinish market have adversely affected the Performance Coatings Group's profitability. The segment's income before income taxes for the three months ended September 30, 2024, was $259.7 million, a decrease of 7.2% compared to $279.7 million in the same period in 2023.

Strategic investments required to enhance market positioning

To enhance market positioning and capitalize on growth opportunities, strategic investments are necessary. The company reported a total net sales and intersegment transfers of $17.801 billion for the nine months ended September 30, 2024, reflecting a minimal increase from $17.800 billion in the previous year. The Performance Coatings Group's gross profit margin as a percentage of net sales was 15.3% for the first nine months of 2024, up from 14.8% in the same period in 2023, indicating some improvement despite revenue challenges.

Metric	2024 (9 months)	2023 (9 months)	% Change
Net Sales (Performance Coatings Group)	$5.208 billion	$5.229 billion	-0.4%
Income Before Income Taxes	$259.7 million	$279.7 million	-7.2%
Gross Profit Margin	15.3%	14.8%	+0.5%
Net External Sales (Foreign Subsidiaries)	$3.370 billion	$3.342 billion	+0.8%

In summary, The Sherwin-Williams Company exhibits a dynamic portfolio as illustrated by the BCG Matrix, with its Paint Stores Group emerging as a strong Star, consistently driving sales growth and profitability. Meanwhile, the Performance Coatings Group stands as a reliable Cash Cow, contributing steady profits despite flat sales. Conversely, the Consumer Brands Group is categorized as a Dog, struggling with declining sales and market challenges. Lastly, the Performance Coatings Group also appears as a Question Mark, presenting mixed results and requiring strategic investments to unlock its growth potential. This multifaceted landscape underscores the importance of strategic adaptability for Sherwin-Williams as it navigates through 2024 and beyond.

Article updated on 8 Nov 2024

Resources:

1. The Sherwin-Williams Company (SHW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The Sherwin-Williams Company (SHW)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View The Sherwin-Williams Company (SHW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.