Weak Europe Mars Owens Illinois' 4Q - Analyst Blog
January 31 2013 - 3:50AM
Zacks
Owens-Illinois, Inc.’s (OI) fourth-quarter
2012 adjusted earnings per share (EPS) of 40 cents were down 17%
from the year-ago adjusted earnings of 48 cents per share, but up
8% from the Zacks Consensus Estimate of 37 cents. Weak economic
conditions in Europe mainly hurt the quarterly results. The company
was able to raise prices but global shipments dropped and
scaled-back production in Europe led to increased costs for
manufacturing and delivery.
On a reported basis, including
one time items, the company posted a loss of 99 cents per share,
narrower than the year-ago loss of $4.71.
Net sales dipped 4% to $1.748
billion in the quarter, surpassing the Zacks Consensus Estimate of
$1.733 billion. Volume dipped 7% mainly due to lower demand in
Europe, which offset strong growth in South America.
Operational
Update
Manufacturing, shipping and
delivery expense decreased 3% year over year to $1.47 billion in
the quarter. Selling and administrative expenses increased 12% to
$145 million. Operating profit dropped 18% year over year to $164
million. The decline in operating profit was attributable to lower
global shipments and higher manufacturing and delivery costs,
primarily due to production curtailment in Europe, which offset the
positive effects of higher sales prices.
Fiscal 2012
Performance
Owens-Illinois reported adjusted
EPS of $2.64 in fiscal 2012, up 9% from $2.43 in fiscal 2011 and
ahead of the Zacks Consensus Estimate of $2.60. Including one-time
items, EPS in the reported fiscal stood at $1.12, as against a loss
of $3.06 in the year-ago period.
Revenues stood at $7 billion,
down 5% from $7.36 billion in 2011 as higher prices were offset by
unfavorable currency translation and a decline in volume.
Persistent sluggish macroeconomic conditions in Europe were mainly
responsible for the decline in volume.
Financial
Update
Cash and cash equivalents were
$431 million as of 2012 end compared with $400 million as of 2011
end. Long-term debt decreased to $3,454 million as of 2012 end from
$3,627 million as of 2011 end. Cash flow from operating activities
was $575 million during 2012 compared with $503 million in 2011.
Free cash flow generated during the year was $290 million, up more
than 30% year over year.
Owens-Illinois expects free cash
flow to increase to $300 million in 2013, driven by improved
operating results, benefiting from cost efficiency and
restructuring programs, particularly in the second half of the
year.
Guidance
The company expects strong
contribution from the emerging regions and stable market conditions
in North America to support growth while macroeconomic uncertainty
in Europe will remain a deterring factor. The company expects
overall modest volume growth in 2013, and higher prices that keep
pace with higher materials costs. Its global cost reduction
initiatives and European asset optimization program is expected to
benefit free cash flow and earnings. Adjusted earnings are expected
in the range of $2.60 to $3.00 per share.
Owens-Illinois Inc. with its
subsidiaries, is presently the largest manufacturer of glass
containers in the world, The company has an esteemed clientele in
the liquor and the non-alcoholic beverage categories.
Owens-Illinois retains a Zacks Rank #3 (Hold).
Peer
Performance
Silgan Holdings
Inc. (SLGN) reported record adjusted EPS of $2.70 in
fiscal 2012, up 3% from $2.63 in fiscal 2011 and a penny ahead of
the Zacks Consensus Estimate. Crown Holdings Inc.
(CCK) reported EPS of $2.81 in fiscal 2012, flat year over year,
and missed the Zacks Consensus Estimate of $2.84. Ball
Corporation (BLL) is yet to announce its fiscal 2012
results. The Zacks Consensus Estimate is at $3.08, projecting 12.7%
year-over-year growth.
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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