Owens-Illinois reported on 25 July 2007 that its 2Q 2007 net profit more than tripled to USD 149.7 million from USD 42.6 million for the 2Q of 2006. The increase was mainly driven by improved glass pl…
Owens-Illinois reported on 25 July 2007 that its 2Q 2007 net profit more than tripled to USD 149.7 million from USD 42.6 million for the 2Q of 2006. The increase was mainly driven by improved glass plant operating performance, higher glass sales and favorable currency exchange rates. Glass container operations reported net sales of USD 1.997 billion for the 2Q 2007 compared with USD 1.745 billion a year ago, an increase of USD 252.2 million. Improved volume, product sales mix and prices accounted for an increase of 9.2%, while favorable currency translation accounted for the balance. “This quarter“s positive results clearly reflect the ongoing progress that our team is achieving with productivity and cost improvement initiatives”, said Al Stroucken, chairman and chief executive officer. “We are in the process of restructuring our business to strengthen our balance sheet and to improve liquidity and capital spending on a global scale. Completing the sale of our Plastics Packaging business will be a significant step toward this goal. We will use the net proceeds from that sale to reduce the company“s debt”. The earnings results improved on Wall Street analysts“ expectations by more than USD 0.30 per share, according to a poll by Thomson Financial. Besides the big profit boost, the company also said its revenue rose 14%. Banc of America Securities analyst George L. Staphos said in a note to investors that the results were impressive not just because the company beat Wall Street“s expectations, but because the report is a sign that the company “gets it, finally, because of the new management team and approach”. Mr. Staphos said Owens-Illinois is now focused on improvements in the market such as pricing and better contract terms with customers if possible. KeyBanc Capital Markets analyst Christopher Manuel said in a client note that Owens-Illinois“ ability to achieve a 4% price increase should translate into higher operating income in the future. “With price under control, we now believe Owens-Illinois should be able to achieve both productivity and cost savings initiatives that will be evident to operating income (instead of offsetting price shortfalls)”, he said. Mr. Manuel also noted that the company has now performed well for two straight quarters. “We believe two consecutive quarters of solid execution provide clear evidence that progress is being made and that Owens-Illinois has turned a corner”, he said.