PERRYSBURG, Ohio, June 15, 2011 /PRNewswire/ -- The management of
Owens-Illinois, Inc. (NYSE: OI)
intends to update the Company's second quarter business outlook
today at the Deutsche Bank Global Industries and Basic Materials
Conference. Entering the period, the Company anticipated second
quarter results would be in line with the prior year, but O-I now
expects second quarter adjusted net earnings will be down from the
prior year period. Segment operating profit margins in the second
quarter of 2011 will likely decline between 3 and 6 percentage
points from second quarter 2010 levels.
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O-I continues to expect global shipment levels will increase
between 5 and 10 percent in the second quarter, compared to the
prior year, driven primarily by several acquisitions made in 2010.
Demand remains strong across most markets and end-use categories,
with the notable exceptions of Australia and New
Zealand and beer in North
America. Yet, higher than expected costs will more than
offset the benefit of stronger global shipments. While significant
cost inflation was already anticipated heading into the second
quarter, O-I also has incurred additional manufacturing and
delivery costs. As a result, O-I will not fully realize the
operating leverage expected from higher production levels in the
second quarter of 2011.
O-I's Asia Pacific region
continues to face challenging market conditions in Australia and New
Zealand. The currencies in those countries have continued to
appreciate, reaching record levels against the U.S. dollar in the
second quarter. Stronger currencies have negatively impacted
exports, including wine, which is one of O-I's key end-use
categories in those two countries. Beer consumption in Australia also is down as consumer sentiment
is extremely conservative due to high interest rates leading to
lower disposable incomes. While O-I anticipated lower wine and beer
bottle shipments, demand trends have deteriorated further over the
course of the quarter. In response, the region has temporarily
curtailed production to balance supply with lower demand. This
curtailment has resulted in unabsorbed manufacturing costs that
were not anticipated entering the second quarter.
O-I's North American region is experiencing supply chain
challenges in the second quarter resulting in higher than expected
manufacturing and delivery costs. The region's inventory levels
were tight heading into the seasonally stronger second quarter.
Furthermore, the region has experienced lower than anticipated
production efficiencies during the quarter. As a result, inventory
levels were too low at certain locations and O-I has incurred
additional delivery costs to meet higher customer demand. Freight
costs have been further impacted by elevated fuel prices. While
shipments to beer customers have been lower than anticipated due to
a continued sluggish U.S. beer market, demand for the wine, spirits
and food segments remains strong. Given strength in these end
markets, O-I is restarting two idled furnaces, as previously
announced. This additional capacity also will help alleviate supply
chain issues.
While O-I will contend with challenging market conditions in
Australia and New Zealand beyond the second quarter, the
Company expects to resolve its North American supply chain and
production issues in a timely manner. In addition, the Company has
been making progress with its European customers on the
implementation of previously announced energy surcharges. Subject
to the outcome of an ongoing review of long-term capacity
requirements in Australia, the
Company continues to expect free cash flow generation of
approximately $300 million in 2011,
compared to $100 million in 2010. The
Company will provide further details on its second quarter
performance and business outlook at its quarterly earnings
conference call scheduled for July 28,
2011.
O-I Senior Vice President and CFO Ed
White will present at the Deutsche Bank Global Industries
and Basic Materials Conference at 8:00 a.m.,
Central Time on Wednesday, June 15,
2011.
A live Webcast of the presentation will be available at
www.corporate-ir.net/ireye/confLobby.zhtml?ticker=OI&item_id=4065803.
The replay will be posted within 24 hours of the presentation and
will be archived through this link for 90 days. Slides for the O-I
presentation will be available through the Company's website:
www.o-i.com/investorrelations.
Company Profile
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.
With revenues of $6.6 billion in
2010, the Company is headquartered in Perrysburg, Ohio, USA, and employs more than
24,000 people at 80 plants in 21 countries. O-I delivers safe,
effective and sustainable glass packaging solutions to a growing
global marketplace. For more information, visit www.o-i.com.
Regulation G
The information presented above regarding adjusted net earnings
relates to net earnings 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. Management uses
this non-GAAP information principally for internal reporting,
forecasting, budgeting and calculating bonus payments. Further, the
information presented above regarding free cash flow does not
conform to GAAP. Management defines free cash flow as cash provided
by 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 this non-GAAP information principally for internal
reporting, forecasting and budgeting. 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 Web
site – www.o-i.com/investorrelations.
Forward Looking Statements
This news release 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) foreign
currency fluctuations relative to the U.S. dollar, (2) changes in
capital availability or cost, including interest rate fluctuations,
(3) the general political, economic and competitive conditions in
markets and countries where the Company has operations, including
uncertainties related to the expropriation of the Company's
operations in Venezuela,
disruptions in capital markets, disruptions in the supply chain,
competitive pricing pressures, inflation or deflation, and changes
in tax rates and laws, (4) consumer preferences for alternative
forms of packaging, (5) fluctuations in raw material and labor
costs, (6) availability of raw materials, (7) costs and
availability of energy, including natural gas prices, (8)
transportation costs, (9) the ability of the Company to raise
selling prices commensurate with energy and other cost increases,
(10) consolidation among competitors and customers, (11) the
ability of the Company to acquire businesses and expand plants,
integrate operations of acquired businesses and achieve expected
synergies, (12) unanticipated expenditures with respect to
environmental, safety and health laws, (13) the performance by
customers of their obligations under purchase agreements, (14) the
Company's ability to further develop its sales, marketing and
product development capabilities, and (15) 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, and events related to asbestos-related
claims. 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 news release.
Copies of O-I news releases are available on the O-I website at
www.o-i.com or at www.prnewswire.com.
SOURCE Owens-Illinois, Inc.