Owens-Illinois, Inc. (NYSE: OI) today reported financial results for the third quarter ended September 30, 2017.
•For the third quarter, earnings from continuing operations were $0.77 per share (diluted), up 13 percent compared with $0.68 per share in 2016, primarily driven by improved segment operating profit in Europe and Latin America, and lower interest and tax expense.
•Net sales were $1.8 billion, an increase of almost 5 percent compared to the prior year third quarter, primarily due to favorable currency translation. Price increased 1 percent on a global basis, while shipments were on par with the prior year.
•Earnings from continuing operations before income taxes were $172 million, an increase of 12 percent compared with the same period in 2016.
•Segment operating profit of reportable segments[1] for the third quarter of 2017 was $260 million, an increase of 10 percent compared with prior year. Notable gains were reported in Europe and Latin America which more than compensated for external weakness in North America. Europe benefited from a favorable sales mix, a currency tailwind and the receipt of an energy credit, as expected. The increase in Latin America was driven by a 7 percent increase in shipments including double-digit gains in Brazil and a reduction in total systems cost.
•Strategic initiatives in commercial programs and end-to-end supply chain management continue to generate benefits as planned. Total systems cost improvements generated approximately $8 million in cost savings during the third quarter.
•With respect to full year guidance, the Company is narrowing its range for earnings and reaffirming its target for cash flow.
•The Company agreed to expand its 50-50 joint venture with Constellation Brands. The joint venture operates a glass container production plant in Nava, Mexico that provides bottles exclusively for Constellation’s adjacent brewery. The newly-expanded relationship provides for the addition of a fifth furnace at the plant and extends the term of the joint venture agreement ten years, to 2034.
“We are seeing significant progress on O-I’s transformation to deliver increased sustainable shareholder value as we continue to execute on our strategy with focus, discipline and accountability,” said Andres Lopez, CEO. “Our rigorous approach is implemented by an entire organization focused on maximizing performance at the enterprise level and incentivized under a single set of metrics. In the quarter, O-I demonstrated its resiliency in the face of well-known, challenging external conditions in the Americas by delivering a seventh consecutive quarter of earnings results in line with, or exceeding, our guidance.”
Commenting on the strategic partnership with Constellation, Andres Lopez continued, “We are excited about the growth that will be enabled through our continued and expanded relationship with Constellation. This investment will allow both companies to realize additional attractive opportunities in Mexican beer exports to the U.S, leveraging the success at the joint venture’s highly-efficient factory in Nava, while bolstering O-I’s relationship with a key strategic customer.”
Third Quarter 2017 Results
Net sales in the third quarter of 2017 were $1.8 billion, an increase of almost 5 percent compared to the prior year third quarter. On a global basis, the improvement in net sales was due to a 1 percent increase in price and favorable currency translation.
In the third quarter, in Latin America, sales volumes increased 5 percent from the prior year mainly due to higher beer and spirits shipments. Shipments in Mexico continue to increase at mid-single digit rates and shipments in Brazil are up markedly, providing further evidence of recovery.
Sales volume in Asia Pacific increased 5 percent in the third quarter, primarily due to higher beer shipments in Australia. In Europe, sales volumes increased 1 percent mainly due to favorable product mix as shipments were flat. Consistent with ongoing trends, North America sales volume declined due to lower shipments, primarily in beer.
The Company continues to mitigate the impact of the ongoing decline in megabeer in the U.S. by positioning itself to benefit from the growing market of U.S. beer imports through its joint venture with Constellation Brands and long-term sales contracts in Mexico. This position has been strengthened through today’s announcement regarding the extension and further expansion of this joint venture.
The Company continues to make solid progress on executing its strategic initiatives. The Company’s focus on total systems cost contributed approximately $8 million in cost savings in the third quarter, leading to a year-to-date total of $26 million.
more detail at: http://investors.o-i.com/phoenix.zhtml?c=88324&p=irol-newsArticle&ID=2310477