Incoming Owens-Illinois chief executive Albert Stroucken has said the container glass giant needs to improve its profitability, and one path to that is through new products.
Among these is a new pres…
Incoming Owens-Illinois chief executive Albert Stroucken has said the container glass giant needs to improve its profitability, and one path to that is through new products. Among these is a new prescription container lid that the company says is both child-resistant and senior citizen-friendly. Also planned are new containers with an embedded computer chip designed to prevent drug counterfeiting and a drug-dispensing device to help consumers know when they took their last dose. The comments by 18 top O-I executives to about 150 industry analysts, investment bankers, and institutional investors on 15 November 2006 in New York established a broad outline of what lies ahead for the firm. “We can“t be satisfied with our result the last two years”, said Mr. Stroucken, 58, who takes the top job at O-I on 4 December replacing Steven McCracken. Recent weak profits are the consequence of high raw material and energy costs and the drain on resources that resulted from the acquisition of BSN Glasspack, a move aimed at giving the company a higher presence in Europe. However, the upcoming CEO said: “We can and will turn this situation around”. He will do it, he said, with discipline and speed. One aid will be new plastic containers and lids, which constitute a relatively small part of the global company“s USD 7.2 billion in annual revenues, or about USD 800 million. Top O-I executives say huge growth is possible in the drug industry, which will have about 3.5 billion prescriptions dispensed in 2006 in the United States. The four-hour conference in Rockfeller Plaza was the last analysts“ meeting for Mr. McCracken, who has been the company“s chairman and CEO since early 2004. He is stepping down after undergoing stomach-cancer surgery in August 2005. Mr. Stroucken grew up in the Netherlands and worked in Europe for many years. He has been on O-I“s board for 15 months, and he resigned in the week ending 19 November 2006 as CEO of H.B. Fuller Co., a St. Paul, Minnesota, manufacturer of adhesives, sealants, and other chemical products. “I“m coming to a company with a great history and a promising future”, Mr. Stroucken said. Improving the company“s margins, controlling costs, and boosting profits are top priorities. O-I has disappointed analysts in each of its last three quarters, with profits falling below expectations, following its financial loss in 2005 of USD 550 million. The performance was blamed mostly on a slowdown in production and large accounting charges for asbestos-injury liability, accounting decreases in the value of some foreign facilities, and charges for deferred US income taxes. The company also announced that James Baehren, its chief legal officer and the official who led O-I while Mr. McCracken was hospitalized, has an added title of senior vice president of strategic planning. Mr. Stroucken said he needs more time to become more acquainted with O-I but indicated that underperforming operations could be at risk. He did not give any specifics, however. Other company officials told analysts that O-I“s asbestos costs continue to go down each year, it is steadily paying down its debt of more than USD 5 billion, and its huge pension fund, once a contributor to the bottom line, has become a USD 35 million drag on earnings in 2006.