Owens-Illinois, Inc. has reported financial results for the first quarter ending 31 March 2011.
First-quarter 2011 earnings from continuing operations attributable to the company were USD 0.44 per sh…
Owens-Illinois, Inc. has reported financial results for the first quarter ending 31 March 2011. First-quarter 2011 earnings from continuing operations attributable to the company were USD 0.44 per share (diluted), compared to USD 0.48 per share (diluted) in the prior year. Adjusted net earnings (non-GAAP) were USD 0.47 per share, compared to USD 0.48 per share in the first quarter of 2010. Flooding in Australia negatively impacted first quarter 2011 earnings by USD 0.04 per share. Net revenue increased from the prior year as recent acquisitions and improving market conditions drove a 7% increase in tonnes shipped. Volumes improved across all regions. Higher shipment and production levels increased segment operating profit to USD 199 million in the first quarter of 2011, compared to USD 193 million in the prior year, despite additional costs including elevated cost inflation. First-quarter net sales were USD 1.719 billion in 2011, up from USD 1.546 billion in the prior year quarter primarily due to higher sales volume and favourable foreign currency translation effects. Net earnings from continuing operations attributable to the Company in the first quarter of 2011 were USD 73 million, or USD 0.44 per share (diluted), compared with net earnings from continuing operations in the prior year of USD 82 million, or USD 0.48 per share (diluted). Exclusive of the items not representative of ongoing operations listed in Note 1, first-quarter 2011 adjusted net earnings were USD 79 million, or USD 0.47 per share (diluted), compared with adjusted net earnings in the prior year first quarter of USD 82 million, or USD 0.48 per share (diluted). Chairman and CEO Al Stroucken said, Our shipments were up from prior year levels across all regions and end-use categories. Higher volumes reflected last year“s acquisitions in South America and China as well as improving economic conditions. Stronger volumes boosted our production levels and capacity utilization rates. However, the benefit of greater shipments was offset by higher costs including elevated cost inflation and interest expense on additional borrowings to fund recent and future acquisitions. We are also investing in our sales and marketing capabilities to drive future profitable growth. O-I reported first-quarter 2011 segment operating profit of USD 199 million, up from USD 193 million in 2010. While the combined effect of price and product mix was essentially flat with the prior year, global shipments (in tonnes) increased 7%. Acquisitions completed in 2010 represented more than 5% of this volume growth. The remaining increase was due to organic growth. First quarter earnings benefited USD 52 million primarily due to improved capacity utilization and footprint realignment efforts conducted in the prior year. However, O-I incurred USD 49 million of cost inflation driven by higher raw material and energy prices and USD 9 million of costs related to flooding in Australia. Additionally, operating expense increased USD 12 million from the prior year to support sales and marketing initiatives and the initial deployment of an SAP information system in North America. Net interest expense increased USD 21 million from the prior year as a result of additional borrowings to fund acquisitions. The company reported total debt of USD 4.363 billion and cash of USD 430 million. Net debt was USD 3.933 billion, an increase of USD 295 million from year-end 2010. The increase in net debt was primarily due to a USD 158 million use of free cash flow to support seasonally higher working capital levels as well as USD 110 million of foreign currency translation. Available liquidity was USD 728 million under the company“s global revolving credit facility. Asbestos-related cash payments during the first quarter of 2011 were USD 33 million, compared to USD 34 million in the first quarter of 2010. New lawsuits and claims filed during the first three months of 2011 were consistent with the same period last year. The number of pending asbestos-related lawsuits and claims approximated 5,900, flat with year-end 2010 levels. With regards to the company“s outlook for the second quarter, Stroucken said, We expect higher shipment and production levels compared to the prior year due to our recent acquisitions and improving demand for glass packaging. While we anticipate elevated cost inflation given high energy prices in Europe, an improving demand profile should create a more receptive environment to pass along additional costs over the course of 2011. We also expect our investments in marketing and innovation to benefit future earnings. Overall, free cash flow should improve to approximately USD 300 million in 2011. O-I is the world“s largest glass container manufacturer and preferred partner for many of the world“s leading food and beverage brands, and employs more than 24,000 people at 80 plants in 21 countries.
