O-I Reports Challenging 2015 Third Quarter Results
Owens-Illinois, Inc. (O-I) recently reported financial results for the third quarter ending September 30, 2015. Net sales in the third quarter of 2015 were $1.6 billion, down $179 million from the prior year’s 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.
“We had good underlying performance in the quarter, with increased profitability in Asia-Pacific and Latin America in constant currency,” said Al Stroucken, chairman and CEO. “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.”
Global sales volume increased by nearly 4% year over year. Excluding the acquired business, global shipments were on par with prior year. Shipments in Europe increased 2%, 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%, and shipments in North America improved by 2%. Excluding the acquisition, Latin America sales volume declined 4%, 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%, excluding the acquisition.
Segment operating profit was $199 million in the third quarter, $49 million lower than the 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.
Due to additional currency impact, the company expects adjusted EPS for the 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.
For more information, visit www.o-i.com.