By Tess Stynes
Avery Dennison Corp.'s (AVY) third-quarter earnings rose 8.5% as
the maker of labels and tags reported stronger margins and a larger
contribution from the office-and-consumer products business that it
is trying to sell.
For the year, the company raised the lower end of its per-share
earnings estimate by a dime and now expects $2 to $2.05.
Avery Dennison has continued efforts to sell its
office-and-consumer products business after a planned deal with
industrial conglomerate 3M Co. (MMM) was scuttled earlier this
month amid antitrust regulators' concerns that the deal would harm
competition in the market for labels and sticky notes. In the
latest period, income from the office-and-consumer products
business rose to 20 cents a share from 14 cents a share a year
earlier.
The company also is in the midst of a restructuring program that
aims to achieve annual cost savings of $100 million by
mid-2013.
Avery Dennison reported a profit of $58.3 million, or 57 cents a
share, up from $49.8 million, or 47 cents a share, a year earlier.
Excluding restructuring charges and other items, earnings from
continuing operations were up at 73 cents from 48 cents.
Revenue decreased 0.8% to $1.49 billion. On an organic basis,
which excludes the impact of currency translation, acquisitions and
divestitures, net sales were up 6%.
Chairman and Chief Executive Dean Scarborough said that
represented the company's strongest organic sales growth since
first quarter 2011.
Analysts polled by Thomson Reuters most recently projected
earnings of 45 cents on revenue of $1.48 billion.
Gross margin rose to 26.4% from 24.5%.
Avery Dennison's pressure-sensitive-materials segment, the
biggest contributor to the top line, reported sales grew 7% on an
organic basis, but declined 1% on a reported basis.
On an organic basis, net sales at its retail-branding and
information-solutions segment were also up 7%, driven by increased
demand from U.S. and European retailers and brands. On a reported
basis, sales improved 4% for the segment.
Shares closed Tuesday at $29.75 and were inactive premarket. The
stock is up 3.7% this year, trailing the broader market.
Write to Tess Stynes at tess.stynes@dowjones.com
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