Net Sales Essentially Flat for O-I in 2017 Second Quarter
O-I’s net sales were $1.8 billion in the second quarter of 2017, on par with the prior year’s second quarter.
Owens-Illinois, Inc. (O-I) recently reported financial results for the second quarter ended June 30, 2017. Net sales were $1.8 billion, on par with the prior year’s second quarter. On a global basis, a 1% percent increase in price was offset by modestly lower sales volume and adverse currency translation. For the year-to-date period, net sales increased more than 50 basis points compared to 2016. Earnings from continuing operations before income taxes were $152 million for the second quarter, compared with $141 million for the same period in 2016, an increase of 8%.
“O-I has delivered a strong first half, reflecting strong business performance from higher shipments and the benefits of our total systems cost approach,” said Andres Lopez, CEO. “We continue to focus on our transformation efforts and reach performance levels that position us for another year of improved financial results. Our teams are driving sales volume in line with our expectations, continued operating stability, and lower total systems cost. The results of this can be seen in our significant margin improvement. We have set the foundation for change and expect additional investments and capability-building in innovation, integration and organizational simplification to accelerate our turnaround.
“With half of the year behind us, expected strong business performance through the second half and favorable non-operational tailwinds, we are raising our guidance on our full-year earnings performance.”
In the second quarter, in Latin America, sales volumes increased by low-single-digits, mainly due to higher spirits and beer shipments. Growth was concentrated in Mexico, which reported record sales. Another positive sign was reported in Brazil, where low-single-digit growth in shipments in the quarter was driven by gains in June. In Europe, shipments were nearly on par with the prior year, as expected. Sales volume in Asia-Pacific declined, primarily due to lower domestic sales in China, as production was exported to support sales to mature markets.
North America sales volume declined due to lower shipments and the ongoing unfavorable mix seen in prior quarters. Shipments declined primarily due to a fewer number of shipping days in the quarter and lower sales of returnable bottles in Canada.
The Company is mitigating the impact of the ongoing decline in megabeer in the U.S. by positioning itself to benefit from the growing market of U.S. beer imports through its joint venture with Constellation Brands and long-term sales contracts in Mexico. In the first half of 2017, shipments in beer for North America, plus Mexico and the JV with CBI, are up mid-single digits.
A European subsidiary of the company recently sold to a third party its right, title and interest in amounts due under its arbitration award against Venezuela. As consideration, the subsidiary received a cash payment of $115 million, and retains a modest potential upside depending upon recovery of the award. In the event the award is partially or completely annulled, the subsidiary may be required to repay up to the entire amount of the cash payment to the third party. Consistent with the current emphasis on deleveraging, the company intends to use the after-tax proceeds of the cash payments to reduce outstanding borrowings under its revolving line of credit.
For more information, visit www.o-i.com.