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Second quarter segment operating profit was $225 million, compared to $271 million in the prior year. The benefit of higher sales and shipment levels was more than offset by significant cost inflation and higher manufacturing costs, notably production and supply chain issues in North America. Furthermore, challenging market conditions in Australia and New Zealand required lower production levels. Remediation efforts are underway to address the challenges in both regions.
“Despite higher sales across all end-use categories, our operating performance this quarter was clearly unacceptable,” said Al Stroucken, chairman and CEO. “During the past three years, we have realigned our manufacturing footprint to improve production efficiency, and we have realized significant fixed cost savings as a result of these actions. However, we didn’t achieve our typical high standards for manufacturing excellence in North America during the second quarter. In addition, we faced challenging market demand in Australia and New Zealand, which contributed to lower production levels in Asia-Pacific. We are responding with urgency and taking the necessary actions to address these issues, meet customer needs and maximize O-I’s long-term earnings power.”
For more information, visit www.o-i.com.