DOW JONES NEWSWIRES
Owens-Illinois Inc.'s (OI) third-quarter profit jumped 61% on
cost cutting and earnings at the container manufacturer beat
expectations.
But shares slumped 10% after-hours to $30 as Chairman and Chief
Executive Al Stroucken said seasonal volume trends and production
cuts to reduce inventories will likely lead to lower earnings
sequentially in the fourth quarter. "Although we expect modestly
lower shipments, our segment operating profit should exceed the
prior-year fourth quarter," he said.
Analysts were expecting earnings to grow to 63 cents a share,
excluding items, from 45 cents a year earlier, according to Thomson
Reuters.
Stroucken added that the company had significant free cash flow
and saw glass shipments in most regions down modestly from a year
earlier, saying they now "more closely reflect consumer-consumption
patterns."
Packaging companies are expected to be at the front end of a
recovery. Owens-Illinois has been cutting capacity to lower its
fixed costs.
For the latest quarter, Owens-Illinois reported a profit of
$126.7 million, or 74 cents a share, up from $78.6 million, or 46
cents a share, a year earlier. Excluding restructuring costs and
write-downs, earnings rose to 95 cents a share from 90 cents. The
company said that was the first year-over-year improvement in
quarterly earnings since the recession started to hurt its business
a year ago.
Revenue dropped 6.7% to $1.87 billion.
Analysts estimated earnings of 93 cents on revenue of $1.87
billion.
Gross margin rose to 23.9% from 20.3% on cost cutting.
Glass shipments declined 7%. The company in July predicted
shipments would be down modestly from a year earlier and comparable
with the second quarter.
Sales declined in all regions, except Asia-Pacific, which saw
1.4% growth. Sales in the company's largest segment, Europe, fell
9.6%. The company didn't give volume data in its press release.
-By Kathy Shwiff and Kerry Grace Benn, Dow Jones Newswires;
212-416-2357; Kathy.Shwiff@dowjones.com