FOR IMMEDIATE
RELEASE
O-I REPORTS FIRST
QUARTER 2015 RESULTS
Foreign currency challenges dampen strong
performance in the Americas
PERRYSBURG, Ohio (April 28,
2015) - Owens-Illinois, Inc. (NYSE: OI) today reported
financial results for the first quarter ending March 31, 2015.
-
First quarter 2015 earnings
from continuing operations attributable to the Company were $0.44
per share (diluted). This compares to first quarter 2014 earnings
of $0.62 per share on a reported basis, and to $0.50 per share on a
constant currency basis.[1]
-
Results were consistent with
management's guidance of $0.40 to $0.45 per share, despite the
greater-than-expected strengthening of the U.S. dollar during the
quarter.
-
Volumes declined approximately
2.5 percent on a global basis year-over-year. As expected, beer
shipments were down in comparison to strong demand leading up to
the World Cup tournament in the prior year. Lower beer volumes also
reflect the Company's 2014 China retrenchment activities. Shipments
for all other categories combined were essentially flat.
-
The stronger U.S. dollar drove
lower segment operating profit, which declined $50
million.
-
On a constant currency basis,
segment profits were down $15 million. North America improved
due to more efficient supply chain operations. Despite escalating
energy and raw material costs, South America achieved the same
level of profits as first quarter last year by obtaining higher
selling prices this quarter. Profits in Europe were dampened by
more-than-typical production downtime, as well as the impact of
competitive pressures on price. Asia Pacific results were
essentially flat as the benefits from last year's restructuring
efforts mostly offset lower shipments.
-
The Company initiated a $100
million accelerated stock repurchase program in February 2015.
The Company anticipates repurchasing at least an additional $25
million in shares over the course of the year.
Commenting on the Company's first quarter results,
Chairman and Chief Executive Officer Al Stroucken said, "We
delivered financial results in line with our guidance, despite
stronger than expected currency headwinds. Performance was
bolstered by solid price gains in South America and supply chain
improvements in North America. Asia Pacific delivered the results
we expected, while Europe was impacted by price pressures and
production downtime from planned furnace rebuilds and the ongoing
asset optimization program. As promised, we are delivering
additional value to our shareholders through deliberate capital
structure management. In addition to stepping up our share
buybacks, we are benefitting from lower interest
expense."
Net sales in the first quarter of 2015 were $1.4
billion, down 13 percent from the prior year first quarter. In
light of the strengthening U.S. dollar and the fact that two-thirds
of Company sales were generated outside the United States, currency
headwinds of approximately $200 million were the primary cause of
the decline. On a constant currency basis, the decline in net sales
was 1 percent. Price was up modestly on a global basis.
Sales volume declined by approximately 2.5 percent
year-over-year, impacted mainly by the 15 percent contraction in
Asia Pacific shipments attributed to last year's plant closures in
China and ongoing weak beer and wine demand in Australia. Volumes
throughout the region are expected to strengthen in the second half
of 2015. Shipments in Europe and South America were almost on par
with prior year, despite lower beer volumes, which were expected
because of the high level of 2014 World Cup activity. Volume in
North America fell almost 2 percent, primarily due to continued
declines in the major domestic beer brands.
Segment operating profit was $168 million, down
$50 million compared with the prior year first quarter. Currency
rate changes adversely impacted segment operating profit by $35
million. On a constant currency basis, segment operating profit was
down $15 million from prior year and was consistent with management
guidance.
Segment operating profit in North America
increased $6 million. Improvements in supply chain management were
partially offset by the impact of production curtailments intended
to control inventory. Europe's operating profit declined $38
million, half of which was due to the devaluation of the Euro.
Average selling prices in Europe fell approximately 1 percent due
to competitive activity, primarily in Southern Europe, and our
successful efforts to secure long-term contracts with
multinationals to stabilize and increase sales volume over time.
Europe reported more production downtime than in the prior year due
to planned furnace rebuilds and engineering activities associated
with the asset optimization program.
In South America, the operating profit decline of
$11 million was caused by currency devaluation, primarily the
Brazilian real and the Colombian peso. Price gains from annual
price adjustment formulas successfully offset rising raw material
and electricity costs in the region. Asia Pacific reported a $7
million decline in operating profit, $5 million of which was due to
the strengthening U.S. dollar.
Corporate and other costs improved by $9 million
compared with the prior year quarter. This was driven by lower
pension expense and lower spending levels.
Net interest expense in the quarter decreased by
$7 million compared with the same period of 2014 due to ongoing
debt management and the positive currency impact from
Euro-denominated debt.
Commenting on the Company's outlook, Stroucken
said, "We anticipate stable market and volume trends in the second
quarter, and currency headwinds will continue. Financial results in
the quarter will be dampened by continued pricing pressure and
lower production linked to a heavier furnace rebuild schedule in
the first half of the year. However, we expect improved
year-on-year results on a constant currency basis in the second
half of 2015 due to higher sales and production volumes."
The Company now expects adjusted EPS for full year
2015 to be in the range of $2.00 to $2.30 per share. This range has
been revised downward primarily because of currency assumptions as
of March 31, 2015. Nevertheless, the midpoint of the range exceeds
the previous year results in constant currency. The stronger dollar
also adversely impacts the translation of cash generated in local
currencies. As such, the Company now expects free cash flow for
2015 to be approximately $250 million.
About O-I
Owens-Illinois, Inc. (NYSE: OI) is the world's largest glass
container manufacturer and preferred partner for many of the
world's leading food and beverage brands. The Company had revenues
of $6.8 billion in 2014 and employs approximately 21,100 people at
75 plants in 21 countries. With global headquarters in Perrysburg,
Ohio, USA, O-I delivers safe, sustainable, pure, iconic,
brand-building glass packaging to a growing global marketplace. For
more information, visit
o-i.com.
O-I's Glass Is Life(TM) movement promotes the
widespread benefits of glass packaging in key markets around the
globe. Learn more about the reasons to choose glass and join the
movement at glassislife.com.
Regulation G
The information presented above regarding adjusted net earnings and
adjusted EPS relates to net earnings from continuing operations
attributable to the Company exclusive of items management considers
not representative of ongoing operations and does not conform to
U.S. generally accepted accounting principles (GAAP). It should not
be construed as an alternative to the reported results determined
in accordance with GAAP. Management has included this non-GAAP
information to assist in understanding the comparability of results
of ongoing operations. Further, the information presented above
regarding free cash flow does not conform to GAAP. Management
defines free cash flow as cash provided by continuing operating
activities less capital spending (both as determined in accordance
with GAAP) and has included this non-GAAP information to assist in
understanding the comparability of cash flows. Management uses
non-GAAP information principally for internal reporting,
forecasting, budgeting and calculating compensation payments.
Management believes that the non-GAAP presentation allows the board
of directors, management, investors and analysts to better
understand the Company's financial performance in relationship to
core operating results and the business outlook.
The Company routinely posts important information
on its website - www.o-i.com/investors.
Forward-looking
statements
This document contains "forward-looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933. Forward-looking
statements reflect the Company's current expectations and
projections about future events at the time, and thus involve
uncertainty and risk. The words "believe," "expect," "anticipate,"
"will," "could," "would," "should," "may," "plan," "estimate,"
"intend," "predict," "potential," "continue," and the negatives of
these words and other similar expressions generally identify
forward-looking statements. It is possible the Company's future
financial performance may differ from expectations due to a variety
of factors including, but not limited to the following: (1) foreign
currency fluctuations relative to the U.S. dollar, specifically the
Euro, Brazilian real, Colombian peso and Australian dollar, (2)
changes in capital availability or cost, including interest rate
fluctuations and the ability of the Company to refinance debt at
favorable terms, (3) the general political, economic and
competitive conditions in markets and countries where the Company
has operations, including uncertainties related to economic and
social conditions, disruptions in capital markets, disruptions in
the supply chain, competitive pricing pressures, inflation or
deflation, and changes in tax rates and laws, (4) consumer
preferences for alternative forms of packaging, (5) cost and
availability of raw materials, labor, energy and transportation,
(6) the Company's ability to manage its cost structure, including
its success in implementing restructuring plans and achieving cost
savings, (7) consolidation among competitors and customers, (8) the
ability of the Company to acquire businesses and expand plants,
integrate operations of acquired businesses and achieve expected
synergies, (9) unanticipated expenditures with respect to
environmental, safety and health laws, (10) the Company's ability
to further develop its sales, marketing and product development
capabilities, and (11) the timing and occurrence of events which
are beyond the control of the Company, including any expropriation
of the Company's operations, floods and other natural disasters,
events related to asbestos-related claims, and the other risk
factors discussed in the Company's Annual Report on Form 10-K for
the year ended December 31, 2014 and any subsequently filed Annual
Report on Form 10-K or Quarterly Report on Form 10-Q. It is not
possible to foresee or identify all such factors. Any
forward-looking statements in this document are based on certain
assumptions and analyses made by the Company in light of its
experience and perception of historical trends, current conditions,
expected future developments, and other factors it believes are
appropriate in the circumstances. Forward-looking statements are
not a guarantee of future performance and actual results or
developments may differ materially from expectations. While the
Company continually reviews trends and uncertainties affecting the
Company's results of operations and financial condition, the
Company does not assume any obligation to update or supplement any
particular forward-looking statements contained in this
document.
Conference call scheduled for
April 29, 2015
O-I CEO Al Stroucken and acting
CFO John Haudrich will conduct a conference call to discuss the
Company's latest results on Wednesday, April 29, 2015, at 8:00
a.m., Eastern Time. A live webcast of the conference call,
including presentation materials, will be available on the O-I
website, www.o-i.com/investors, in the Presentations & Webcast
section.
The conference call also may be accessed by
dialing 888-733-1701 (U.S. and Canada) or 706-634-4943
(international) by 7:50 a.m., Eastern Time, on April 29. Ask for
the O-I conference call. A replay of the call will be available on
the O-I website, www.o-i.com/investors, for a year following the
call.
Contact: Sasha Sekpeh, 567-336-5128 - O-I Investor
Relations
Lisa Babington, 567-336-1445 - O-I Corporate Communications
O-I news releases are available on the O-I website
at www.o-i.com.
O-I's second quarter 2015 earnings conference call
is currently scheduled for Thursday, July 30, 2015, at 8:00 a.m.,
Eastern Time.
[1] In constant
currency terms, the prior year amount reflects first quarter 2015
exchange rates, as cited in the table entitled Reconciliation to
Constant Currency in this release.
O-I Logo
1Q15 Earnings Presentation
1Q15 Earnings Release
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Owens-Illinois, Inc. via Globenewswire
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