Acquisition Helps Drive 2015 Sales for O-I
Owens-Illinois, Inc. (O-I) recently reported financial results for the fourth quarter and full year ending December 31, 2015. Net sales in the fourth quarter of 2015 were $1.6 billion, up $23 million from the prior year fourth quarter. For net sales of reportable segments, the stronger U.S. dollar led to unfavorable currency translation of approximately $200 million in net sales, or about a 13% decline. Price was essentially flat on a global basis, with higher prices in Latin America largely offset by lower prices in the other regions. The acquired business contributed $197 million in net sales.
Global sales volume increased by nearly 14% compared to the prior year’s fourth quarter. Excluding the acquired business, global shipments were 2% higher year over year. Shipments in Asia-Pacific increased 7%, driven by improving wine exports from Australia. Europe sales volume was on par with the prior-year quarter, as lower beer shipments were offset by higher shipments in all other categories.
North America sales volume, excluding the acquired business, improved more than 2% year over year led by stronger wine, spirits and beer shipments. Latin America sales volume, excluding the acquired business, was flat to the prior year, as strong sales volume in the Andean region offset continued weakness in Brazil. Including the acquired business, fourth quarter sales volumes improved in North America by 11% and in Latin America by 55%.
Global sales volumes increased 3% in 2015 due to the acquired business. Excluding the acquired business, volumes were on par with 2014. Shipments in Europe and North America were modestly higher. Asia-Pacific volumes declined by low single digits, as the planned contraction of sales volume in China was partially offset by favorable beer and wine volumes in Australia in the second half of the year. In Latin America, sales were down by low single digits, driven entirely by Brazil.
Full year net sales were $6.2 billion, down $628 million from 2014. Adverse currency translation due to the stronger U.S. dollar caused an $881 million decline in net sales of reportable segments, or 13%. The acquired business contributed $258 million in sales.
O-I expects adjusted earnings for the full year 2016 to be in the range of $2.10 to $2.25. Anticipated benefits from the acquired business and strategic initiatives to improve operations are expected to more than compensate for the impact of the strong U.S. dollar, particularly in the first half of 2016.
“We are pleased to deliver earnings and cash flow in line with our guidance for the quarter, and we continue to execute upon initiatives to improve performance,” said Andres Lopez, CEO. “Our work to date has already begun to deliver tangible benefits as evidenced by more consistent production as the year progressed. North America has recovered exceptionally well through the year, and we will leverage our learnings to improve performance in Europe. We continue to successfully integrate the Vitro food and beverage acquisition, which is already positively impacting segment profitability.
“Looking ahead, we expect that trends in the majority of our end markets will remain stable in 2016, and O-I will increasingly benefit from our growing exposure to U.S. beer imports and the Mexican domestic market. While we recognize continued external uncertainties, such as economic conditions in Brazil and price dynamics in Europe, we are pressing hard on key initiatives that will increase profitability in 2016, including: maximizing the value of the acquired business; improving our end-to-end supply chain performance; and reducing costs through increasing organizational effectiveness and spending discipline. We expect to deliver higher earnings and cash flow in 2016 while continuing to prioritize deleveraging our balance sheet.”
For additional information, visit www.o-i.com.