Update: Avery Dennison Reports Third QuarterFriday, October 24, 2014
Avery Dennison Corp. on Friday reported earnings, as the company was hit by raw material and restructuring costs.
The Glendale label maker reported net income of $64.3 million (68 cents a share) in the fiscal third quarter ended Sept 27, compared to $46.5 million (62 cents) for the same quarter last year. Revenue rose 3.5 percent to $1.56 billion.
Analysts on average expected pro forma earnings of 74 cents a share on revenue of $1.57 billion, according to Thomson Financial Network. On that basis, Avery Dennison exceeded forecasts with earnings from continuing operations of 77 cents.
The company’s largest segment, its Pressure Sensitive Materials division, which accounts for more than 70 percent of its total sales, grew 5 percent to $1.16 billion. Pressure-sensitive labels can be found on anything from beer and wine bottles to shampoo.
However, the company said its operating margin declined 10 basis points to 10.1 percent, as the net impact of raw material costs and transition costs in Europe hit the bottom line.
“We expect to deliver improved operational performance in the fourth quarter, with a reduction in the transition costs impacting PSM (Pressure Sensitive Materials),” said Avery Dennison Chief Executive Dean Scarborough in a statement.
The company continues to focus on cost-cutting as it has transitioned from a paper-products firm. In the third quarter, the company realized about $7 million in savings from restructuring. The company expects to incur cash restructuring costs of approximately $55 million in 2014.
In a separate announcement Friday, the company named Mitchell R. Butier as its president and chief operating officer, effective Nov. 1.
Butier, 43, has been the company’s chief financial officer since June 2010, and will continue to serve in that position until a successor is named.
In his new role, Butier will be responsible for the company’s operations, with all business unit leaders reporting to him. Butier joined Avery Dennison from PricewaterhouseCoopers in 2000. Prior to being named senior vice president and chief financial officer, he served from 2007 to 2010 as corporate vice president, global finance, and chief accounting officer.
Shares closed up $2.19 cents, or 5 percent, to $46.37 on the New York Stock Exchange.