FOR IMMEDIATE RELEASE
O-I REPORTS SECOND
QUARTER 2015 RESULTS
Stable results in North America and Asia
Pacific;
headwinds in Europe and South America
PERRYSBURG, Ohio (July 29,
2015) - Owens-Illinois, Inc. (NYSE: OI) today reported
financial results for the second quarter ending June 30, 2015.
-
Second quarter 2015
earnings from continuing operations attributable to the Company
were $0.26 per share (diluted). Excluding certain items management
considers not representative of ongoing operations, adjusted
earnings[1] were $0.60
per share, which was at the high end of management guidance. This
compares to second quarter 2014 earnings of $0.80 per share on a
reported basis, and to $0.65 per share on a constant currency
basis.1
-
Volumes were down 1 percent on
a global basis year-over-year, largely a result of lower beer
shipments in Brazil. Shipments for all other regions combined were
flat.
-
As expected, lower segment
operating profit was partially offset by favorable non-operational
items, including pension, interest and tax. Segment operating
profit declined $75 million; $39 million on a constant currency
basis. In North America and Asia Pacific, segment operating profits
were on par with the prior year second quarter. As indicated in the
quarter, lower beer shipments in Brazil, against record sales in
the comparable period, led to lower financial performance in South
America. Profit in Europe was adversely impacted by planned
production downtime and lower selling prices.
-
In May 2015, the Company
announced its proposed acquisition of Vitro, S.A.B. de C.V.'s food
and beverage glass container business in an all-cash
transaction valued at approximately $2.15 billion. Vitro is the
largest supplier of glass containers in Mexico. The transaction,
which is currently expected to close in the second half of 2015, is
projected to be accretive to cash flow and earnings per share in
the first year after closing.
Commenting on the Company's second quarter
results, Chairman and Chief Executive Officer Al Stroucken said,
"Our performance in the second quarter was in line with
expectations, as favorable results from non-operational items
offset incremental weakness in Brazil. Our North America and Asia
Pacific regions delivered solid results in the quarter. In Europe,
asset optimization and furnace rebuilds, coupled with ongoing
competitive pressure, resulted in lower profits. In South America,
we successfully offset energy and soda ash inflation with price
increases. Profits were impacted by a sharper than expected
contraction in Brazil beer sales. Overall, our earnings per share
benefited from the refinancing of $300 million in high coupon bonds
and the completion of a $100 million accelerated share buyback
program."
Net sales in the second quarter of 2015 were $1.5
billion, down $254 million from the prior year second quarter.
Adverse currency translation caused by the strength of the U.S.
dollar accounted for approximately $240 million of the decline in
net sales. On a constant currency basis, the decline in net sales
was approximately 1 percent. Price was essentially flat on a global
basis, with lower prices in Europe and North America largely offset
by higher prices in South America.
Global sales volume declined by approximately 1
percent year-over-year. Shipments in Europe were consistent with
the prior year second quarter. Volume in North America increased
nearly 2 percent, where a modest decline in beer shipments was more
than offset by higher shipments in all other categories. Volume in
Asia Pacific contracted 3 percent, partly due to the waning impact
of plant shutdowns in China in 2014. While wine demand trends
suggest sequential stabilization in Australia, shipments there were
still modestly lower than prior year. Sales volume in South
America contracted 10 percent. The decline was most pronounced in
Brazil, albeit from record sales in the comparable 2014 period.
Excluding beer, shipments in Brazil were flat compared to prior
year.
Segment operating profit was $187 million in the
second quarter, down $75 million compared with the prior year
quarter. On a constant currency basis, segment operating profit was
down $39 million.
Excluding the impact of foreign currency, segment
operating profit in North America and Asia Pacific were similar to
the prior year second quarter. Europe's operating profit declined
$45 million, with more than 40 percent of the decrease related to
the devaluation of the Euro. Similar to the trend experienced in
the first quarter, average selling prices in Europe were
approximately 1 percent lower year on year due to competitive
pressures, primarily in Southern Europe. As expected, Europe
reported more production downtime than in the prior year due to
planned furnace rebuilds and engineering activities associated with
the asset optimization program. Europe results were dampened by the
timing of a sizeable energy credit. In 2014, the credit was
recognized in the second quarter, whereas in 2015, Europe is
expecting that energy credit in the third quarter.
In South America, operating profit declined $26
million, of which more than 40 percent was caused by currency
translation, primarily due to the weakening Brazilian real and the
Colombian peso. The aforementioned lower sales volumes contributed
to lower profits. Price gains from annual price adjustment formulas
and intensified commercial activity offset almost all of the rising
raw material and electricity costs in the region. The prior year
period benefited from approximately $6 million of non-strategic
asset sales, which did not repeat in the current year.
Corporate and other costs improved by $11 million
compared with the prior year second quarter. This was driven by
lower pension expense and episodic sales of machine parts to
licensees.
Net interest expense[2] in the
quarter decreased by $8 million, compared with the same period of
2014, due to debt refinancing and the positive currency impact on
Euro-denominated debt. In the quarter, the Company completed a new
$2.1 billion bank credit agreement and repaid $300 million of high
coupon senior notes due in 2016, both of which enhance the
Company's financial flexibility.
In May 2015, the Company announced the proposed
acquisition of Vitro, S.A.B. de C.V.'s food and beverage glass
container business. The transaction provides the Company with a
competitive position in the attractive and growing glass segment of
the packaging market in Mexico. The deal is expected to be
accretive to cash flow and earnings per share in the first year
after closing and is currently expected to close in the second half
of 2015.
Commenting on the Company's outlook for the third
quarter, Stroucken said, "We have begun to see the stabilization of
market and demand trends. North American manufacturing operations
are expected to continue to improve, and Asia Pacific volumes will
benefit from a major new beer contract in Australia. Lower volumes
in South America, especially Brazil, are likely to continue
weighing on the region's profitability. European results in the
quarter will be dampened by the carryover of production downtime
from engineering projects and lower prices. The Company will
continue to benefit from lower pension and interest expense. On
balance, earnings should be similar to prior year results on a
constant currency basis."
The Company expects adjusted EPS for full year
2015 to be in the range of $2.00 to $2.20 per share and free cash
flow to be approximately $250 million for the year. The Company's
guidance does not reflect the potential impact of the Vitro food
and beverage business acquisition.
About O-I
Owens-Illinois, Inc. (NYSE: OI) is the world's largest glass
container manufacturer and preferred partner for many of the
world's leading food and beverage brands. The Company had revenues
of $6.8 billion in 2014 and employs approximately 21,100 people at
75 plants in 21 countries. With global headquarters in Perrysburg,
Ohio, USA, O-I delivers safe, sustainable, pure, iconic,
brand-building glass packaging to a growing global marketplace. For
more information, visit
o-i.com.
O-I's Glass Is Life(TM) movement promotes the
widespread benefits of glass packaging in key markets around the
globe. Learn more about the reasons to choose glass and join the
movement at glassislife.com.
Regulation G
The information presented above regarding adjusted net earnings and
adjusted EPS relates to net earnings from continuing operations
attributable to the Company exclusive of items management considers
not representative of ongoing operations and does not conform to
U.S. generally accepted accounting principles (GAAP). It should not
be construed as an alternative to the reported results determined
in accordance with GAAP. Management has included this non-GAAP
information to assist in understanding the comparability of results
of ongoing operations. Further, the information presented above
regarding free cash flow does not conform to GAAP. Management
defines free cash flow as cash provided by continuing operating
activities less capital spending (both as determined in accordance
with GAAP) and has included this non-GAAP information to assist in
understanding the comparability of cash flows. Management uses
non-GAAP information principally for internal reporting,
forecasting, budgeting and calculating compensation payments.
Management believes that the non-GAAP presentation allows the board
of directors, management, investors and analysts to better
understand the Company's financial performance in relationship to
core operating results and the business outlook.
The Company routinely posts important information
on its website - www.o-i.com/investors.
Forward-looking
statements
This document contains "forward-looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933. Forward-looking
statements reflect the Company's current expectations and
projections about future events at the time, and thus involve
uncertainty and risk. The words "believe," "expect," "anticipate,"
"will," "could," "would," "should," "may," "plan," "estimate,"
"intend," "predict," "potential," "continue," and the negatives of
these words and other similar expressions generally identify
forward looking statements. It is possible the Company's future
financial performance may differ from expectations due to a variety
of factors including, but not limited to the following: (1) the
Company's ability to consummate the Vitro Acquisition on a timely
basis or at all, (2) risks associated with governmental approvals
of the Vitro Acquisition, (3) the Company's ability to integrate
the Vitro Business in a timely and cost effective manner, to
maintain on existing terms the permits, licenses and other
approvals required for the Vitro Business to operate as currently
operated, and to realize the expected synergies from the Vitro
Acquisition, (4) risks associated with the significant transaction
costs and additional indebtedness that the Company expects to incur
in financing the Vitro Acquisition, (5) the Company's ability to
realize expected growth opportunities and cost savings from the
Vitro Acquisition, (6) foreign currency fluctuations relative to
the U.S. dollar, specifically the Euro, Brazilian real, Mexican
peso, Colombian peso and Australian dollar, (7) changes in capital
availability or cost, including interest rate fluctuations and the
ability of the Company to refinance debt at favorable terms, (8)
the general political, economic and competitive conditions in
markets and countries where the Company has operations, including
uncertainties related to economic and social conditions,
disruptions in capital markets, disruptions in the supply chain,
competitive pricing pressures, inflation or deflation, and changes
in tax rates and laws, (9) consumer preferences for alternative
forms of packaging, (10) cost and availability of raw materials,
labor, energy and transportation, (11) the Company's ability to
manage its cost structure, including its success in implementing
restructuring plans and achieving cost savings, (12) consolidation
among competitors and customers, (13) the ability of the Company to
acquire businesses and expand plants, integrate operations of
acquired businesses and achieve expected synergies, (14)
unanticipated expenditures with respect to environmental, safety
and health laws, (15) the Company's ability to further develop its
sales, marketing and product development capabilities, and (16) the
timing and occurrence of events which are beyond the control of the
Company, including any expropriation of the Company's operations,
floods and other natural disasters, events related to
asbestos-related claims, and the other risk factors discussed in
the Company's Annual Report on Form 10-K for the year ended
December 31, 2014 and any subsequently filed Quarterly Report on
Form 10-Q. It is not possible to foresee or identify all such
factors. Any forward-looking statements in this document are based
on certain assumptions and analyses made by the Company in light of
its experience and perception of historical trends, current
conditions, expected future developments, and other factors it
believes are appropriate in the circumstances. Forward-looking
statements are not a guarantee of future performance and actual
results or developments may differ materially from expectations.
While the Company continually reviews trends and uncertainties
affecting the Company's results of operations and financial
condition, the Company does not assume any obligation to update or
supplement any particular forward-looking statements contained in
this document.
Conference call scheduled for
July 30, 2015
O-I CEO Al Stroucken and acting
CFO John Haudrich will conduct a conference call to discuss the
Company's latest results on Thursday, July 30, 2015, at 8:00 a.m.,
Eastern Time. A live webcast of the conference call, including
presentation materials, will be available on the O-I website,
www.o-i.com/investors, in the Presentations & Webcast
section.
The conference call also may be accessed by
dialing 888-733-1701 (U.S. and Canada) or 706-634-4943
(international) by 7:50 a.m., Eastern Time, on July 30. Ask for the
O-I conference call. A replay of the call will be available on the
O-I website, www.o-i.com/investors, for a year following the
call.
Contact:
Sasha Sekpeh,
567-336-5128 - O-I Investor Relations
Barbara Owens, 567-336-5585 - O-I Corporate Communications
O-I news releases are available on the O-I website
at www.o-i.com.
O-I's third quarter 2015 earnings conference call
is currently scheduled for Wednesday, October 28, 2015, at 8:00
a.m., Eastern Time.
[1] Adjusted
earnings refers to earnings from continuing operations attributable
to the Company, excluding items management does not consider
representative of ongoing operations. In the second quarter of
2014, there were no such items. In constant currency terms, the
prior year amount reflects second quarter 2015 exchange rates. See
the table entitled Reconciliation to Adjusted Earnings and Constant
Currency in this release.
[2] Excluding
charges of $28 million during the second quarter of 2015 for note
repurchase premiums and the write-off of finance fees related to
debt that was repaid prior to its maturity.
2Q15 Earnings Presentation
2Q15 Earnings Release
O-I Logo
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Owens-Illinois, Inc. via Globenewswire
HUG#1942248
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