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Owens-Illinois, Inc. (O-I) recently reported financial results for the fourth quarter and full year ending December 31, 2008. The company reported net sales of $1.705 billion for the fourth quarter of 2008, a $252 million decline from $1.957 billion in the fourth quarter of 2007. A stronger U.S. dollar in the fourth quarter of 2008 caused a $195 million reduction in the reported amount of foreign currency sales compared with the fourth quarter of 2007.
Higher prices and improved product sales mix across all regions added $152 million to sales for the quarter, a 7% increase over the prior year’s fourth quarter. However, the decline in consumption due to ongoing global economic deterioration resulted in fewer tons shipped, accounting for $197 million of the reduction in sales from the prior-year quarter.
The company's loss from continuing operations in the fourth quarter of 2008 was $228.6 million, compared with earnings of $14.6 million a year ago. Exclusive of certain items that management considers not representative of ongoing operations, 2008 fourth quarter earnings were $76.2 million, compared with $167.4 million in the same quarter last year. This decrease in earnings was driven by temporary manufacturing line shutdowns taken to balance capacity with demand and manage inventory levels. Additional factors contributing to the decrease included inflation in manufacturing and delivery costs, lower sales volumes, and unfavorable foreign currency translation. Improved prices and product sales mix partially offset these unfavorable factors.
O-I reported a loss of $1.38 per share (diluted) from continuing operations in the fourth quarter of 2008, compared with earnings of $0.06 (diluted) per share for the fourth quarter of 2007. Exclusive of certain items, earnings per share were $0.45 (diluted) in the fourth quarter of 2008, compared with $1.00 (diluted) in the same quarter last year.
“The results of the fourth quarter clearly reflect the increased flexibility we have created at O-I in recent years,” said Al Stroucken, chairman and chief executive officer. “We were able to react quickly to a weakening global economy and temporarily curtail production in the fourth quarter to prevent carrying excess inventory quantities into 2009. We are confident that a strategy to enhance our liquidity in these uncertain times is the correct course for O-I and is in the best interest of our shareholders.”
Net sales from continuing operations increased 4.2% to $7.885 billion in 2008, compared with $7.567 billion in 2007. The $318 million increase was driven by improved prices and product sales mix across all regions, as well as favorable currency translation, principally of the euro, in the first three quarters of the year. However, a decline in tons shipped partially offset these favorable effects.
For the full year 2008, the company reported earnings from continuing operations of $251.5 million, or $1.48 per share (diluted), compared with earnings from continuing operations of $299.3 million, or $1.78 per share, last year. Exclusive of certain items that management considers not representative of ongoing operations, the company earned $645.2 million, or $3.80 per share (diluted), in 2008, compared with $493.7 million, or $2.94 per share (diluted), in 2007. The increase in earnings in 2008 was primarily the result of improved prices and product sales mix, further improvements in glass plant operating efficiencies, and favorable foreign currency translation, partially offset by lower sales volume and inflation in manufacturing and delivery costs.
“I am pleased with the results we achieved in 2008,” said Stroucken. “This is clearly proof of our ability to adapt to a changing environment through improved operating efficiencies and a commitment to margin improvement. Although our strong performance in the first half of the year was dampened by the global economic downturn in the second half, the focus on our strategies allowed us to post the highest annual earnings per share in more than 17 years.
“Although we will be facing significant business challenges in 2009, we are well-positioned-both financially and operationally-to meet those challenges. We benefited in 2008 from strict adherence to our margin improvement strategy and our focus on retaining financial flexibility. These will continue to serve as powerful drivers in the company's long-term growth and profitability goals.”
Additional details are available at www.o-i.com.