Sales of Xuanwei in the first half of the year increased by 2% to US $8.9bn

On July 23, Xuanwei disclosed its financial statements for 2018. The report shows that compared with the same period in 2018, the comprehensive net sales increased by $104 million (2.2%) to $4.88 billion in the second quarter as of June 30, 2019, and increased by $180 million (2.1%) to $8.92 billion in the first half of the year. This quarter's growth was mainly due to increased paint sales in North American stores, new customer plans launched in 2018 and higher sales prices, partially offset by weak demand and adverse currency conversion rate changes in some end markets outside the US. Changes in the currency conversion rate reduced consolidated net sales by 1.5% and 1.8%. Diluted net earnings per share increased to $5.03 in the second quarter compared to $4.25 per share in the second quarter of 2018. The second quarter of 2019 includes acquisition related expenses and tax credits of $0.75 and $0.79 per share for investment losses. As mentioned earlier, tax credit investment losses relate to the company's investment in federal renewable energy tax credit funds through dcsolarsolutions, Inc. and some of its affiliates. Diluted net income per share for the second quarter of 2018 includes acquisition related expenses and provision for environmental expenses of $1.23 and $0.25 per share, respectively.

Diluted net earnings per share for the first six months increased to $7.65 per share, compared with $6.86 per share for the same period in 2018. In the second quarter, the net sales of the Americas group increased by 5.0% to $2.76 billion, and increased by 4.4% to $4.91 billion in the first half of the year, mainly due to the increase of paint sales and sales prices in all end markets of North American stores, partially offset by unfavorable currency conversion rates. The change of currency conversion rate reduced Xuanwei net sales by 0.8% and 1.2% respectively in the second quarter and the first half of the year. Segment profit increased $42.5 million to $612 million in the second quarter and $36.2 million to $944 million in six months, primarily due to increased paint sales and higher sales prices, partially offset by adverse currency conversion rates. Segment profit for the first six months was also negatively impacted by the increased cost of raw materials in the first quarter, which was the main reason. Changes in currency conversion rates reduced segment profits by $2.3 million and $6.8 million in the second and first half of the year, respectively. Segment profit as a percentage of net sales rose to 22.2% from 21.7% in the second quarter of last year. In the first half of the year, segment profit accounted for 19.2% of net sales, basically the same as the same period last year. In the second quarter, the net sales of consumer brand group increased by 3.4% to $804.5 million, and increased by 1.7% to $1.46 billion in six months.

The growth in the second and first half of 2018 was mainly due to the launch of new customer plans and higher sales prices, partially offset by the divestiture of guardsman's furniture protection business in the third quarter of 2018, adverse currency conversion rate changes and lower sales. Changes in the currency conversion rate resulted in a 1.6% drop in net sales for the consumer brand group in the second and first half of the year. Segment profit in the second quarter increased to US $141 million from US $90.9 million in the same period of last year, mainly due to the increase in sales price, the decrease in the impact of good cost control and procurement accounting, partially offset by incremental investment. Segment profit as a percentage of external net sales rose to 17.5% from 11.7% in the second quarter of last year. In the second quarter, net sales of high-performance coatings group fell 3.8% to US $1.32 billion, and fell 1.9% to US $2.55 billion in six months. The decrease in sales in the second quarter and the first half of the year was mainly due to soft sales outside North America and adverse changes in currency conversion rates, partially offset by higher sales prices. Changes in currency conversion rates resulted in a 2.7% and 3.3% decrease in the group's net sales for the second and first half of the year.

Segment profit in the second quarter increased to $150.3 million from $144 million in the second quarter of last year, mainly due to higher sales prices and good cost control, partially offset by higher purchase accounting expenses. Segment profit as a percentage of external net sales rose to 11.4% from 10.5% in the second quarter of last year. Segment profit as a percentage of external net sales rose to 9.8% in the first six months from 9.0% last year. John G. morikis, chairman and chief executive officer, commented that "Xuanwei achieved record results in net sales, EBITDA, profit before tax and net operating cash in the second quarter, overcoming the imbalance in demand in the end market outside the United States. Our North American paint shop's sales growth, as well as our continued progress in pricing initiatives across all segments, together drive a combined adjusted gross margin of 44.9% and support us in continuing to invest in solutions for our customers. We have also continued to effectively manage costs, coupled with an increase in gross margin, resulting in a 15% year-on-year increase in adjusted earnings per share. We expect the gross margin to continue to improve in the second half of the year due to continued sales growth and forecast lower raw material prices. We expect consolidated net sales to increase by a low percentage in the third quarter compared to the same period last year. Comprehensive net sales in 2019 will increase by 2% - 4% over 2018. "