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Growth in SICO's First-quarter Results.

Article Excerpt
LONGUEUIL, Quebec -- SICO INC. (TSX:SIC)

- Sales of $68.0 million and net earnings of $2.7 million or $0.40 per share ($0.39 diluted);

- The Company further expands its architectural paint distribution networks throughout Canada.

For the three-month period ended April 1, 2005, SICO INC. recorded sales of $68.0 million, up 8.1% over $63.0 million the previous year. The first quarter ended with net earnings of $2.7 million or $0.40 per share ($0.39 diluted), compared with net earnings of $1.2 million or $0.17 per share (basic and diluted) for the same quarter in 2004.

Most of the changes between the 2005 and 2004 first-quarter results are attributable to the fact that 2004 having comprised 53 weeks as opposed to 52, 2005 began one week later than usual, which mitigated the cyclical pattern normally associated with the first quarter. While the first quarter of 2004 included the week of December 27th to January 2nd, a period of slowdown in activities, the first quarter of 2005 began in January and included an extra week in March when demand in the architectural paint market traditionally reflects increased activity. This shifting effect will gradually level off over the next quarters, especially in the fourth quarter.

"Aside from the one-week deferral, the first-quarter revenue growth in the Architectural Sector is further explained by the increases in the selling price of certain product categories implemented in the first quarter to offset the rising prices of raw materials. The Industrial Sector's sales were relatively stable, excluding the results of the Sico-Becker S.A.S. joint venture, which was divested in the fourth quarter of 2004, and the impact of foreign currency fluctuation. The significant growth in SICO's net earnings is mostly attributable to the positive impact on profit margins of efficient cost management, selling price increases and lower financial expenses due to the Company's excellent financial position," said Pierre Dufresne, President and Chief Executive Officer.

In terms of operations, Pierre Dufresne indicated that, during the first quarter of 2005, SICO mainly focused on consolidating its position as the leading architectural paint supplier in all major regions across Canada, as well as an important supplier of industrial metal coatings in North America. "One of the quarter's highlights consists in the distribution agreement announced on March 30, 2005 with Kent Building Supplies, the largest home improvement retailer in Atlantic Canada, thereby substantially increasing our share of the architectural paint market in that region. At the end of the quarter, we began supplying the 29 Kent Building Supplies stores, including seven big-box stores, located in the four Atlantic Provinces, with SICO brand paints and MULCO brand caulking and adhesives."

Outlook

Mr. Dufresne pointed out that, taking into account the seasonal cycle of the Canadian demand for architectural paints, first-quarter results are generally not a fair indicator of the industry's and SICO's annual performance. "Yet, we entered the second quarter with confidence as we continue to benefit from favourable conditions in the Canadian architectural paint market, a consequence of strong renovation spending. Banking on this positive environment, the Architectural Sector will continue to develop its distribution networks across the country. Despite the fierce competition that prevails in its markets, our Industrial Sector will...