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 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.