Net Sales Essentially Flat for O-I in 2018 Second Quarter
O-I’s net sales for the quarter of 2018 were $1.8 billion, an increase of 1% compared to the 2017 second quarter.
Owens-Illinois, Inc. (O-I) recently reported financial results for the second quarter ended June 30, 2018. Net sales for the quarter were $1.8 billion, an increase of 1% compared to the 2017 second quarter. Prices were up approximately 2% percent, reflecting cost inflation and sales mix. The overall impact of currency was favorable on net sales, with an increase reported in Europe and a decline in the Americas.
Global sales shipments were down 1% compared with the 2017 second quarter. The decline is largely attributed to the impact of external transportation strikes in Brazil and a raw material batch disruption in Mexico. Both incidents, now resolved, limited product available for sale in the quarter. The company’s joint venture with Constellation Brands, Inc. reportedly continues to perform well, reporting higher sales compared with prior year.
“O-I’s second quarter results exceed management’s guidance, again demonstrating resilience in the face of well-known headwinds arising during the quarter, such as transportation strikes in Brazil and the stronger U.S. dollar,” said Andres Lopez, CEO. “Global shipments were solid, taking into account the strong performance of our joint venture with CBI. We continue to benefit from favorable pricing dynamics and a concerted effort to improve sales mix. And, Asia-Pacific is nearing successful completion of its asset advancement project. Building on a secure foundation, we expect continued growth in sales, margins, earnings and cash flow in 2019 and beyond.”
The company’s Americas segment continues to focus on Total Systems Cost efforts to mitigate inflationary pressures. The Americas is undertaking steps to adjust its manufacturing footprint to better align with ongoing customer needs. O-I announced during the quarter its plans to shut down a plant in the U.S. that primarily produces megabeer and is progressing with plans to expand capacity in Brazil to support customer needs.
In Europe, segment operating profit continues to expand. In the second quarter of 2018, segment operating profit was $101 million, up more than 25% compared with $80 million in the second quarter of 2017. This increase was driven by favorable foreign currency exchange rates, price increases, continued benefits from Total Systems Cost, and the recognition of an energy credit.
Segment operating profit in Asia-Pacific in the second quarter of 2018 was $2 million. While lower than the 2017 quarter, the magnitude of the year-on-year decline was less than that reported in the first quarter of 2018. As planned, asset improvement projects underway in the region drove operating costs higher. As most of the projects in the region are now substantially complete, improving production volume and lower manufacturing expense will drive higher margins sequentially in Asia-Pacific the rest of 2018.
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