Avery Dennison Corp. (AVY: Quote) Tuesday reported a lower profit for the second quarter, as sales declined. Nevertheless, earnings for the quarter easily topped estimates, while revenues fell shy of expectations.
Commenting on the results, Chief Executive Dean Scarborough said, "Second-quarter results were in line with our expectations, and we are on track for full-year earnings growth and free cash flow within the ranges of our guidance."
Avery Dennison, which makes pressure-sensitive materials, said sales for the second quarter inched down 1 percent to $1.53 billion from last year's $1.54 billion. Analysts estimated revenues of $1.54 billion for the quarter.
On an organic basis, net sales grew 4 percent.
Pressure sensitive materials sales remained stable with last year, and accounted for majority of the business. Retail Branding and Information Solutions sales fell 2 percent, and sales from other specialty converting business edged down 1 percent, year-over-year.
Operating margins for the quarter narrowed down to 6.2 percent from 6.8 percent last year.
Pasadena, California-based Avery Dennison's second-quarter profit dropped to $64.2 million or $0.62 per share from $73.3 million or $0.69 per share last year. Earnings from continuing operations were $0.49 per share compared to $0.50 per share a year ago.
Excluding special items, earnings decreased to $0.72 per share from $0.78 per share last year.
Adjusted earnings from continuing operations dropped to $0.56 per share from $0.60 per share last year. Analysts polled by Thomson Reuters expected earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.
Looking forward, Avery Dennison lowered its earnings guidance from continuing operations to a range of $1.55 to $1.70 per share, from prior estimate of $1.65 to $2.00 per share. Excluding an estimated $0.35 per share for restructuring costs and other items, adjusted earnings from continuing operations are expected in a range of $1.90 to $2.05 per share, compared to its prior range of $1.80 to 2.15 per share.
Analysts currently expect earnings of $1.96 per share for the year.
Moving ahead, Avery Dennison said it is implementing the next phase of restructuring initiative in order to achieve double-digit earnings growth and higher returns.
Scarborough said. "Our near-term target is to achieve more than $100 million in annualized savings by mid-2013. The leaner cost structure that will result will enhance our overall competitive position and strengthen our ability to increase returns even in an uncertain economic environment."
AVY is currently trading on the NYSE at $30.24, up 7.08 percent, on a volume of 1.3 million shares.
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by RTT Staff Writer
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