DOW JONES NEWSWIRES
Owens-Illinois Inc.'s (OI) third-quarter profit jumped 61% on cost cutting and earnings at the container manufacturer beat expectations.
But shares slumped 10% after-hours to $30 as Chairman and Chief Executive Al Stroucken said seasonal volume trends and production cuts to reduce inventories will likely lead to lower earnings sequentially in the fourth quarter. "Although we expect modestly lower shipments, our segment operating profit should exceed the prior-year fourth quarter," he said.
Analysts were expecting earnings to grow to 63 cents a share, excluding items, from 45 cents a year earlier, according to Thomson Reuters.
Stroucken added that the company had significant free cash flow and saw glass shipments in most regions down modestly from a year earlier, saying they now "more closely reflect consumer-consumption patterns."
Packaging companies are expected to be at the front end of a recovery. Owens-Illinois has been cutting capacity to lower its fixed costs.
For the latest quarter, Owens-Illinois reported a profit of $126.7 million, or 74 cents a share, up from $78.6 million, or 46 cents a share, a year earlier. Excluding restructuring costs and write-downs, earnings rose to 95 cents a share from 90 cents. The company said that was the first year-over-year improvement in quarterly earnings since the recession started to hurt its business a year ago.
Revenue dropped 6.7% to $1.87 billion.
Analysts estimated earnings of 93 cents on revenue of $1.87 billion.
Gross margin rose to 23.9% from 20.3% on cost cutting.
Glass shipments declined 7%. The company in July predicted shipments would be down modestly from a year earlier and comparable with the second quarter.
Sales declined in all regions, except Asia-Pacific, which saw 1.4% growth. Sales in the company's largest segment, Europe, fell 9.6%. The company didn't give volume data in its press release.
-By Kathy Shwiff and Kerry Grace Benn, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com