US glass container manufacturer Owens-Illinois Inc. has reported increased earnings for the fourth quarter and full year 1995.
Owens-Illinois reported net earnings of US$ 169.1 million, or US$ 1.40 p…
US glass container manufacturer Owens-Illinois Inc. has reported increased earnings for the fourth quarter and full year 1995. Owens-Illinois reported net earnings of US$ 169.1 million, or US$ 1.40 per share for 1995. Previous-year earnings, excluding the effect of a US$ 100 million pretax charge in the fourth-quarter of 1994, were US$ 140 million, or US$ 1.16 per share. The 1995 results included unusual fourth quarter credits and charges which offset one another and therefore did not affect earnings. Joseph H. Lemieux, Owens-Illinois chairman and chief executive officer, said, “Our performance continues to be driven by rapidly growing international operations, increased demand for certain plastic products, and efforts throughout the company to improve quality, productivity, and cost control. We expect these trends to produce solid improvements in 1996 and beyond.” Since its initial public offering of common stock in December 1991, Owens-Illinois has now achieved four straight years of double-digit increases in earnings from continuing operations, excluding the effects of one-time or unusual items. This includes 16 consecutive quarters of improved year-to-year results. In accordance with the company“s strategy for long-term growth, the international and plastics operations continued in 1995 to assume increasingly important roles in the company“s performance. For the first time, these units each exceeded US$ 1 billion in net sales. Together, they accounted for 56% of the com-pany“s sales in 1995, up from 40% in 1991. Sales of the international operations have doubled over the past four years, reflecting both internal growth and acquisitions. “Glass container demand continues to grow at a very strong pace in developing countries,” Mr. Lemieux said. “In these areas, glass typically has a cost advantage over other packaging materials and many of our major customers are seeking a reliable source of glass containers to support their global expansion plans.” The domestic glass container operations were adversely affected in 1995 by a substantial increase in the cost of corrugated boxes, as well as by the conversion of soft drink containers from glass to plastic, which resulted in excess capacity in the industry and intensified pricing competition. These factors were partially offset by improvements in cost control and productivity resulting from a restructuring programme announced in early 1994. In addition, glass containers gained a larger share of the packaging mix for the US brewing industry, as a result of increased consumer demand for premium and specialty beers. “Although the glass container industry continues to operate in a challenging environment, we expect improved results for Owens-Illinois in 1996 as a result of steps we have taken to realign manufacturing operations and secure additional business,” Mr. Lemieux said. The company“s annual effective tax rate for 1995 was 32.5% compared to 39.5% for 1994 as adjusted for unusual items. The lower 1995 rate is primarily the result of a higher mix of foreign earnings, which benefited from lower effective tax rates in 1995. Increased earnings from foreign subsidiaries also resulted in an increase in the amount of those earnings allocated to minority share owners, principally in Brazil, Colombia, and Poland.