OI OI Glass Inc

Owens-Illinois, Inc. (OI) reported adjusted earnings of 48 cents per share for the fourth quarter of 2011, surpassing the Zacks Consensus Estimate by 2 cents. Earnings were 3 cents higher than 45 cents earned in the year-ago quarter.

During the quarter the GAAP loss per share was $4.71 versus a loss of 51 cents reported in the prior-year quarter. The difference between  operating and GAAP earnings during the quarter was due to the impact of one-time charges amounting to $5.28 per share and a one-time gain of 9 cents a share.

Adjusted earnings per share of $2.37 for fiscal 2011 were short of $2.60 reported in fiscal 2010. The results however went past the Zacks Consensus Estimate of $2.36 by a penny.

Revenue

Owen-Illinois’s quarterly revenue increased 5.0% to $1,818 million from $1,728 million in the year-ago quarter. Total revenue increased on the back of higher contributions from Europe, North America and Asia Pacific while lower results from South America were a partial offset.

The top line was marginally ahead of the Zacks Consensus Estimate of $1,801 million.

Owen-Illinois’s fiscal 2011 revenue increased 11.0% to $7,358 million from $6,633 million in 2010.

The year-over-year growth in revenue was driven by improved shipments as volumes expanded across all regions. Sales also benefited from favorable foreign currency translations and pricing. Besides, acquisitions completed in 2010 boosted sales.

Full year revenues beat the Zacks Consensus Estimate of $7,331 million.

Operational Update

Manufacturing and delivery costs during the quarter were up by 7% year over year while for the fiscal year costs increased by 13.0%. The increase in manufacturing cost resulted mainly from cost inflation.

On similar lines selling and administrative expenses during the quarter were up by 4% year over year while for the full year costs soared 13.0%.

The favorable impact of strong shipments, higher sales price and foreign currency transaction were offset by the increase in manufacturing cost and selling & administrative expenses.

As a consequence, segment operating profit in the reported quarter declined 9% year over year to $201 million. Operating profit for the fiscal slid 7.3% year over year to $894 million.

Financial Update

As of December 31, 2011, cash and cash equivalents were $400 million compared with $640 million as of December 31, 2010.

Long-term debt decreased to $3.62 billion at the end of 2011 from $3.92 billion at the end of 2010.

Cash from operating activities was $503 million in of 2011 compared with $592 million in 2010.

Guidance

The company expects its 2012 shipments to be at par with 2011. The company expects higher global pricing and better operating performance to mitigate unrecovered 2011 inflation and anticipated inflation in 2012.

However, the company is a little cautious about volumes in 2012. Further price negotiations in February and clarity regarding the current stalemate in Europe will allow Owens-Illinois to be more sure about volumes.

Peer Comparison

The company competes with Silgan Holdings Inc. (SLGN). Silgan is expected to report its fiscal 2011 earnings on January 31, 2012. The company expects fourth quarter earnings in the range of 53 cents to 58 cents. Analysts polled by Zacks expect Silgan Holdings to clock earnings of 54 cents and $2.62 per share for fourth quarter and fiscal 2011, respectively.

Headquartered in Perrysburg, Ohio, Owens-Illinois through its subsidiaries manufactures and sells glass containers primarily in Europe, North America, South America, and the Asia-Pacific. Owens-Illinois presently retains a Zacks #4 Rank, which translates into a short-term Sell rating.

 
OWENS-ILLINOIS (OI): Free Stock Analysis Report
 
SILGAN HOLDINGS (SLGN): Free Stock Analysis Report
 
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