O-I REPORTS THIRD QUARTER 2015 RESULTS; Adjusted earnings in line with expectations
(Thomson Reuters ONE) -
FOR IMMEDIATE RELEASE
O-I REPORTS THIRD QUARTER 2015 RESULTS
Adjusted earnings in line with expectations
PERRYSBURG, Ohio (Oct. 27, 2015) - Owens-Illinois, Inc. (NYSE: OI) today
reported financial results for the third quarter ending Sept. 30, 2015.
* Third quarter 2015 earnings from continuing operations attributable to the
Company were $0.11 per share (diluted) compared with $0.37 per share in the
same period of 2014. Excluding certain items management considers not
representative of ongoing operations, adjusted earnings[1] were $0.57 per
share, in line with management guidance. These results compared with $0.75
per share in the same period of 2014 and $0.60 per share on a constant
currency basis.
* On Sept. 1, 2015, the Company completed the acquisition of the food and
beverage glass container business of Vitro, S.A.B. de C.V. The $2.15 billion
transaction included operations in Mexico, Bolivia and the U.S. In 2016, the
acquisition is expected to contribute $0.30 in earnings per share and
generate substantial free cash flow.
* Year-over-year volumes were up nearly 4 percent on a global basis. Excluding
the acquisition, volumes were on par with prior year.
* Segment operating profit declined $49 million, or $9 million on a constant
currency basis. The decline was largely attributed to Europe, which faced
pricing pressure and elevated engineering activity. Improving operational
performance in Asia Pacific more than offset currency headwinds in the
region. The acquisition contributed $14 million of segment operating profit
in the quarter.
* Retained corporate and other costs improved by $10 million compared with the
prior year third quarter. This was primarily driven by lower pension
expense, reduced management incentive accruals and favorable currency
hedges.
Commenting on the Company's third quarter results, Chairman and Chief Executive
Officer Al Stroucken said, "We had good underlying performance in the quarter,
with increased profitability in Asia Pacific and Latin America in constant
currency. Operating results in Europe were in line with expectations, but
impacted by the delay of a substantial energy credit. We accelerated engineering
activity in North America to reduce long term costs, setting the stage for
increased profitability in the future. We are pleased to have completed the
acquisition of Vitro's food and beverage business earlier than expected and are
making excellent progress with the integration."
Net sales in the third quarter of 2015 were $1.6 billion, down $179 million from
the prior year third quarter. Price was essentially flat on a global basis, with
higher prices in Latin America largely offset by lower prices in North America
and Europe. Adverse currency translation due to the stronger U.S. dollar caused
an approximate $240 million decline in net sales. The Company benefited from the
addition of $61 million in sales from the newly acquired food and beverage
business.
Global sales volume increased by nearly 4 percent year over year. Excluding the
acquired business, global shipments were on par with prior year. Shipments in
Europe increased 2 percent, driven by higher beer sales, and Asia Pacific
shipments were equal to the prior year quarter.
Including the newly acquired business, volume in Latin America increased nearly
16 percent, and shipments in North America improved by 2 percent. Excluding the
acquisition, Latin America sales volume declined 4 percent, primarily due to the
decline reported in Brazil. Excluding beer, shipments in Brazil were flat
compared to prior year. Ongoing weak megabeer trends brought North America sales
volume down 1 percent, excluding the acquisition.
Segment operating profit was $199 million in the third quarter, $49 million
lower than prior year, primarily due to the strength of the U.S. dollar compared
with the Euro, the Brazilian real and the Colombian peso. On a constant currency
basis, segment operating profit was down $9 million as earnings improved in Asia
Pacific and Latin America, yet declined in Europe and North America. The
acquisition contributed $14 million of segment operating profit, reflected in
Latin America and North America.
Excluding the impact of foreign currency, Asia Pacific's operating profit
increased more than 35 percent compared to the prior year third quarter due to
cost reduction efforts and the favorable impact of prior restructuring actions.
On a constant currency basis, Latin America's operating profit increased $9
million compared with prior year third quarter. The contribution of the acquired
business in Mexico and Bolivia more than offset the adverse impact of lower
shipments elsewhere in the region.
Europe's operating profit declined $36 million, with nearly half of the decrease
caused by devaluation of the Euro. Similar to the trend experienced in the first
half of 2015, average selling prices in Europe were approximately 1 percent
lower year on year due to competitive pressures, primarily in the south. Europe
reported more production downtime as compared to the prior year due to
engineering activities associated with ongoing asset optimization. These
investments also drove a year-on-year increase in depreciation. Due to
legislative delays, Europe did not receive an $8 million energy credit expected
in the quarter.
Despite continued productivity gains, North America reported a $5 million
decline in operating profit. Results were impacted by planned furnace rebuild
activity, incremental investments the Company made to improve its cost structure
and a weaker Canadian dollar.
Net interest expense[2] in the quarter was consistent with the same period of
2014. The positive impacts of debt refinancing and the currency impact on Euro-
denominated debt were offset by acquisition-related interest expense.
The effective tax rate on adjusted earnings was 27 percent. The tax rate was
higher than prior year, reflecting timing issues associated with the set-up of
the optimal legal structure for the acquired operations in Mexico.
In the quarter, the acquisition reduced adjusted earnings per share by
approximately $0.03. This was modestly better than expectations. The
acquisition's contribution to segment operating profit was more than offset by
incremental interest and tax expense. The acquisition is expected to be neutral
to earnings in the fourth quarter, and then to become accretive in 2016.
Earlier this month, the Company announced that COO Andres Lopez has been named
CEO effective Jan. 1, 2016. Commenting on the Company's outlook for the fourth
quarter, Lopez said, "While we expect current economic and industry trends,
including currency headwinds, to continue in the fourth quarter, we anticipate
gains in sales and production volume. We will continue to integrate Vitro's
former food and beverage business, and work on stabilizing and improving
business performance."
Due to additional currency impact, the Company now expects adjusted EPS for full
year 2015 to be approximately $2.00. The Company expects free cash flow to be
approximately $200 million for the year, based on currency rates at the end of
the third quarter. Because the majority of the Company's free cash flow is
generated in the fourth quarter, the amount will be heavily influenced by year-
end currency rates.
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. Following the
acquisition of Vitro's food and beverage business, the company now employs
approximately 27,000 people at 81 plants in 23 countries. With global
headquarters in Perrysburg, Ohio, U.S., 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) the
Company's ability to integrate the Vitro Business in a timely and cost effective
manner, to maintain on existing terms the permits, licenses and other approvals
required for the Vitro Business to operate as currently operated, and to realize
the expected synergies from the Vitro Acquisition, (2) risks related to the
impact of integration of the Vitro Acquisition on earnings and cash flow, (3)
risks associated with the significant transaction costs and additional
indebtedness that the Company expects to incur in financing the Vitro
Acquisition, (4) the Company's ability to realize expected growth opportunities
and cost savings from the Vitro Acquisition, (5) foreign currency fluctuations
relative to the U.S. dollar, specifically the Euro, Brazilian real, Mexican
peso, Colombian peso and Australian dollar, (6) changes in capital availability
or cost, including interest rate fluctuations and the ability of the Company to
refinance debt at favorable terms, (7) 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,
(8) consumer preferences for alternative forms of packaging, (9) cost and
availability of raw materials, labor, energy and transportation, (10) the
Company's ability to manage its cost structure, including its success in
implementing restructuring plans and achieving cost savings, (11) consolidation
among competitors and customers, (12) the ability of the Company to acquire
businesses and expand plants, integrate operations of acquired businesses and
achieve expected synergies, (13) unanticipated expenditures with respect to
environmental, safety and health laws, (14) the Company's ability to further
develop its sales, marketing and product development capabilities, and (15) 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 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 October 28, 2015
O-I CEO Al Stroucken, COO Andres Lopez and acting CFO John Haudrich will conduct
a conference call to discuss the Company's latest results on Wednesday, Oct.
28, 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 Oct. 28.
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
Kristin Kelley, 567-336-2395 - O-I Corporate Communications
O-I news releases are available on the O-I website at www.o-i.com.
O-I's fourth quarter 2015 earnings conference call is currently scheduled for
Tuesday, Feb. 9, 2016, at 8:00 a.m., Eastern Time.
--------------------------------------------------------------------------------
[1] Adjusted earnings refers to earnings from continuing operations attributable
to the Company, excluding items management does not consider representative of
ongoing operations. In constant currency terms, the prior year amount reflects
January through September 2015 exchange rates. See the table entitled
Reconciliation to Adjusted Earnings and Constant Currency in this release.
[2] Excluding charges of $14 million during the third quarter of 2015 for note
repurchase premiums and the write-off of finance fees related to debt that was
repaid prior to its maturity.
3Q15 Earnings Presentation:
http://hugin.info/150659/R/1961850/715412.pdf
O-I Logo:
http://hugin.info/150659/R/1961850/715414.jpg
3Q15 Earnings Release:
http://hugin.info/150659/R/1961850/715413.pdf
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other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Owens-Illinois, Inc. via GlobeNewswire
[HUG#1961850]
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Datum: 27.10.2015 - 21:05 Uhr
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News-ID 429905
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