O-I Sees Slight Sales Increase in 2018
O-I’s net sales for the year were $6.9 billion, an increase of $8 million compared to 2017.
Owens-Illinois, Inc. (O-I) recently reported financial results for the full year and fourth quarter ended December 31, 2018. Net sales for the year were $6.9 billion, an increase of $8 million compared to 2017. Prices were 2% higher on a global basis, mainly due to favorable sales mix and ongoing cost inflation. Total glass container shipments decreased nearly 2% on a global basis driven by the transfer of production to the company’s joint venture with Constellation Brands, ongoing trends in U.S. beer, and discrete events and capacity constraints in both the Americas and Europe.
The company’s joint venture with Constellation Brands, Inc. reportedly continues to perform well, delivering higher sales compared with the prior year, driven in part by the fourth furnace that ramped up early in 2018. A fifth furnace is expected to be completed by the end of 2019.
In Europe, segment operating profit was $316 million, an improvement of $53 million over the prior year, or 20%. The region benefited from improvements in Total System Cost, resulting in lower operating costs compared to the prior year. Glass container shipments in 2018 were down less than 1% compared with 2017. This decline was offset by the change in sales mix, a favorable pricing environment and the effects of foreign currency.
Americas’ segment operating profit was $585 million, a decrease of $29 million compared with 2017. Total glass container shipments in the region were down nearly 3% in 2018 compared to the prior year, with higher shipments to food customers offset by lower shipments to alcoholic beverage customers. Despite capacity constraints, year-over-year shipments in Brazil were also strong in 2018. In the U.S., solid year-over-year growth in shipments to food customers in 2018 were more than offset by a decline in shipments to alcoholic beverage customers, due to the ongoing trends in beer shipments and the transfer of beer production to the company’s joint venture with Constellation Brands. Segment operating profit was impacted by higher operating costs in 2018 compared with prior year, driven by cost inflation, the Brazil transportation strike, a now resolved raw material batch disruption at a plant in Mexico, and higher transportation costs due to freight rate inflation.
Asia-Pacific reported segment operating profit of $44 million, which was $21 million below the prior year. Glass container shipments in 2018 were down nearly 3% compared to 2017. As expected, the now completed incremental asset improvement projects in the region drove operating costs higher compared to 2017.
“In line with our guidance, the company delivered solid financial performance in 2018, demonstrating growing resilience in overcoming currency and inflationary headwinds,” said Andres Lopez, CEO. “We continue to progress in our ability to deliver, while also investing to support future shareholder value creation.
“Throughout 2018, Europe’s focus on the top line sales mix management and premium products, and the benefits of Total System Cost efforts drove higher profits and strong margin expansion. Over the course of the year, the Americas team responded to several unplanned headwinds and the stronger U.S. dollar by growing sales volume outside the U.S., and reducing structural costs across the region. Asia-Pacific completed its 2018 asset advancement program and exited the year with a strong margin, as expected. Given favorable market trends, ascribable growth opportunities, and continued structural cost reductions, the company expects higher earnings and cash flow generation in 2019, consistent with our Investor Day commitments.”
Net sales in the fourth quarter of 2018 were $1.6 billion, down compared to the 2017 fourth quarter, as a result of lower shipments in the quarter. Europe offset some of the decline with strong gains in beer.
Additional details are available at www.o-i.com.