Owens-Illinois Beats Expectations - Analyst Blog
October 25 2012 - 11:30AM
Zacks
Owens-Illinois’ (OI) third-quarter 2012
adjusted earnings were 69 cents per share compared to the year-ago
adjusted earnings of 84 cents per share; beating the Zacks
Consensus Estimate of 66 cents.
On a reported basis, the company posted earnings of 55 cents per
share compared with the year-ago earnings of 72 cents.
Net sales decreased 6.2% to $1.747 billion in the quarter; net
sales, however, beat the Zacks Consensus Estimate of $1.746
billion. The year- over- year decline in net sales was attributable
to negative impacts of foreign currency as well as lower volumes
and lower demand in Europe, which offset the positive effects of
price and product mix and higher shipments in the Americas.
Operational Update
Manufacturing, shipping and delivery expense decreased 4.7% year
over year to $1.405 billion in the quarter. Selling and
administrative expenses fell 5.1% to $131 million. Operating profit
also dipped 8.6% year over year to $245 million.
The decline in operating profit was attributable to higher expenses
related to manufacturing and delivery, cost inflation as well as
lower global shipments, offsetting the positive effects of higher
sales prices.
Financial Update
Cash and cash equivalents were $336 million as of September 30,
2012, versus $400 million as of December 31, 2011. Long-term debt
amounted to $3.537 billion as of September 30, 2012, compared with
$3.627 billion as of December 31, 2011. Cash provided by operating
activities was $225 million during the quarter compared with $189
million in the year ago quarter.
Guidance
The company is hopeful about generating free cash flow of $250
million in 2012. It expects profit in South America to grow year
over year, driven by strong demand and efficiencies from the
furnace in southern Brazil. However, the company apprehends that
lower demand in Europe will exert pressure on earnings in the
fourth-quarter 2012.
Owens-Illinois competes with companies like Silgan Holdings
Inc. (SLGN), Ball Corporation (BLL) and
Crown Holdings Inc. (CCK). In third-quarter 2012,
Silgan’s adjusted earnings improved 2.6% year over year to $1.17
per share, but missed the Zacks Consensus Estimate by a penny.
Owens-Illinois retains a short-term Zacks #3 Rank (Hold). We have a
long-term Neutral recommendation on the stock.
BALL CORP (BLL): Free Stock Analysis Report
CROWN HLDGS INC (CCK): Free Stock Analysis Report
OWENS-ILLINOIS (OI): Free Stock Analysis Report
SILGAN HOLDINGS (SLGN): Free Stock Analysis Report
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