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RPM International (RPM)
RPM International Surprises Wall Street
RPM International pleased investors today by announcing that its first quarter profit was up 5 percent. The protective coating and sealing manufacturer has been struggling the past few quarters, but surprised Wall Street with its recent, strong quarter performance. Although RPM saw its revenue drop 7 percent, it still managed to boost its profit margin. RPM International anticipates that its full year profit will be towards the higher end of its previous profit projections. RPM's first quarter results have investors buzzing with excitement, but exactly how has RPM managed such an impressive improvement?
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RPM International has been hit hard by the slumping economy over the past few quarters. It has been in a similar situation as many other companies. The struggling economy has caused consumers to tighten their budgets, which has led to dwindling sales. This scenario was amplified even more in the housing industry, which was dramatically affected by the economic downturn. Unfortunately for RPM, a majority of its sealants and coatings business comes from housing construction and remodeling. RPM initiated massive cost cutting programs in an attempt to combat falling sales and the stagnant economic climate. Although the cost cutting efforts helped, it was not enough. RPM needed something more which it finally got last quarter.
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After several lackluster quarterly performances, RPM received the boost that it needed. The housing market finally started to pick up again. This recent improvement in home sales really helped RPM. Although the housing market has not fully recovered, the increase in home sales has been a turning point RPM. The higher housing turnover has led to higher sales. Sellers, who are preparing their homes for the market, are investing in various home improvement efforts while buyers are purchasing sealants and coating products for home remodeling. Both the home seller and buyer have been instrumental to the RPM's bump in sales. Overall, RPM's cost-cutting efforts coupled with the recent housing market comeback have helped improve its quarterly performance.
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RPM International has been very fortunate this last quarter. A bulk of its success seems to be attributed to the recent housing market recovery. However, RPM International has also added to the quarterly improvement with its diligent cost cutting efforts. Expense reduction is very important but it is also limited to a degree. RPM International can only cutback on so many things before it starts dramatically affecting the end product. The housing market comeback appears to have been RPM's saving grace. RPM International is optimistic that the housing market will continue to improve, but nothing is for certain. RPM is hoping that both the housing market and its own performance will continue to recover with increasing sales and better cost management.
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Profile |
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