CHICAGO - Paint maker Sherwin-Williams Co. saw its first quarter profit fall by more than half, the company said Thursday, as paint sales slowed and the dismal housing market weighed down results.

But the company's profit was still sharply better than expected, and its shares climbed to a three-month high in trading.

Sherwin-Williams gets about half its sales from remodeling and repainting business. As the economy slowed - and housing sales dropped - its sales contracted sharply.

"We did, in fact, see a sharp drop in demand for paint and coatings in the second half of last year and we had no reason to expect that conditions would improve early this year," Chairman and Chief Executive Christopher M. Connor told investor during a conference call. "And clearly, they have not."

For the three months that ended March 31, the company earned $37.3 million, or 32 cents per share. That's down from the manufacturer's profit of $77.9 million, or 64 cents per share, during the same period last year.

Meanwhile, sales fell a worse-than-expected 13 percent to $1.55 billion from $1.78 billion last year - a sign consumers aren't more willing to make discretionary purchases.

Analysts surveyed by Thomson Reuters expected the Cleveland-based company to earn 21 cents per share on revenue of $1.62 billion.

Sales in the company's paint stores fell 13 percent to $894.4 million, while same-store sales for the unit - an important retail industry metric of sales in stores open at least a year - fell 12.7 percent. Net income for the division sank 32 percent to $56 million.

Sales in the Cleveland-based company's consumer group - which mainly supplies paints to retailers - were almost flat, rising less than half a percent to $288.2 million. The unit's profit fell 29 percent to $30.2 million.

Sales in its global finishing group tumbled 21 percent, to $362.5 million, and the unit's profit plummeted nearly 88 percent, to $5.3 million.

About 10 percent of Sherwin-Williams' sales are from new housing and new building construction. And housing construction plunged to the second-lowest level on record in March, according to federal data released Thursday.

The Commerce Department said construction of new homes and apartments dropped 10.8 percent last month to a seasonally adjusted annual rate of 510,000 units. That was the second-lowest construction pace in records that go back 50 years.

Analysts have said Sherwin-Williams is likely to remain under pressure for the rest of the year, because its fortunes are tied so directly to consumer spending and the housing market.

Morningstar analyst Anthony Dayrit said the company may have to consider cutting prices, which it raised at the end of 2008, as consumers rein in spending.

Sherwin-Williams said it expects to earn between $1.20 and $1.45 per share for the quarter that ends in late June, while it expects sales to fall between 9 percent and 12 percent. That compares with $171.7 million, or $1.45 per share, in earnings a year earlier on revenue of $2.23 billion.

Analysts surveyed by Thomson Reuters expect the manufacturer to earn $1.20 per share on revenue of $2.05 billion in the current quarter.

For the full year, Sherwin-Williams now expects net sales to fall by a percentage in the mid to high single digits. But it maintained its profit outlook of $3 to $4 per share. Last year, the company earned $476.9 million, or $4 per share, on revenue of $7.98 billion.

Sherwin-Williams shares climbed $5.85, or 11.4 percent, to $56.96 in trading Thursday.

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