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Grainger Reaffirms 2017 Outlook, Expects 5% MRO Growth In 2018
Grainger held its annual analyst meeting this past Friday in Lake Forest, IL, where CEO DG Macpherson and CFO Ron Jadin presented a reaffirmation of the company's full year 2017 outlook, as well as a forecast for solid growth in 2018.
As part of the meeting, Grainger provided the following 2017 and 2018 outlook for sales and earnings, adjusted for items that the company believes are not indicative of ongoing operations:
--For the full year 2017, the company noted favorable sales and earnings per share trends. It reiterated its sales guidance of 1.5 to 2.5 percent growth and earnings per share guidance of $10.40 to $10.90. Grainger had 2016 full year sales growth of 1.7 percent.
--For the full year 2018, the company is forecasting sales growth of 3 to 7 percent and earnings per share of $10.60 to $11.80, with gross profit declines of 40 to 80 base points. It is expecting 2018 daily sales to grow 5.5 percent, following an estimated 3 percent growth in 2017.
"Accelerating growth with large and medium customers in the United States remains our top priority," Macpherson stated in a press release. "Removing the pricing barrier has allowed us to provide value to our customers, and we are very encouraged by the volume response we're seeing. In Canada, we are facing into a significant business model reset that should increase profitability in a shorter time frame. Our single-channel businesses continue their strong revenue growth while expanding operating margin."
In medium customers, Grainger had a 7 percent decline in Q1 of this year and 3 percent growth in Q2, and then after it accelerated its pricing actions, it had Q3 growth of 15 percent and an estimated 15 to 20 percent growth in Q4.
Grainger also reiterated its longer term operating margin target of 12 to 13 percent in 2019, excluding items that the company believes are not indicative of ongoing operations.
Grainger's presentation showed it values the worldwide MRO market at $560 billion, with $148 billion of that in North America, $41 billion in Japan and $16 billion in the U.K. — the three geographies the company is focused on. Grainger said it has 6 percent market share in the U.S., where it does 76 percent of its sales. It said it has 7 percent market share in Canada (7 percent of sales); 2 percent in Japan (7 percent of sales); 2 percent in the U.K. (3 percent of sales); 1 percent in Mexico (1 percent of sales); and less than 1 percent in other (5 percent of sales).
In the U.S., Grainger expects full year 2017 MRO market value growth of 2.5 percent, followed by 2-3 percent growth in 2018 and 2019.
Source: Industrial Distribution
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