H.B. Fuller shares fall on weaker-than-expected guidance

Shares of H.B. Fuller Co. declined more than 5% in early trading on Tuesday after the specialty chemicals manufacturer lowered its full-year sales guidance, citing softer demand across key end-markets.

The company, which supplies adhesives and other materials to industries including packaging, construction and consumer goods, reduced its 2024 sales forecast to a range of $3.4 billion to $3.5 billion. This compares with prior guidance of $3.6 billion to $3.7 billion and a 2023 revenue total of $3.6 billion.

H.B. Fuller attributed the downward revision to weaker-than-expected demand in North America and Europe, particularly in its industrial and construction segments. The company also noted challenges in pricing power amid competitive market conditions.

Chief Executive Officer Jim Owens said in a statement that while demand remains resilient in some areas, broader macroeconomic pressures have weighed on customer spending and inventory levels. "The revised guidance reflects a more cautious outlook as we navigate a slower demand environment," Owens said.

The company maintained its adjusted earnings per share guidance at $4.00 to $4.20, though it warned that margins could face pressure from higher raw material costs and operational inefficiencies. H.B. Fuller’s adjusted operating margin is now expected to be in the range of 10.5% to 11.0%, down from the prior outlook of 11.0% to 11.5%.

Analysts at Stifel trimmed their price target on H.B. Fuller to $110 from $120, citing the weaker guidance and potential margin compression. The stock was trading at $102.50 in premarket activity, down 5.3% from Monday’s close.

H.B. Fuller has faced headwinds in recent quarters, including elevated raw material costs and supply chain disruptions. The company’s shares are down approximately 12% year-to-date, underperforming the S&P 500’s 15% gain over the same period.