Segment operating profit1 was $236 million which compares to $255 million in the second quarter of 2018
Image: Net sales were $1.8 billion, essentially flat with the prior year second quarter. Photo: Courtesy of Petra Blahoutová from Pixabay.
Owens-Illinois (O-I), reported financial results for the second quarter ended June 30, 2019.
“The Company has been on a transformational journey and has made meaningful progress over the past three years. However, the second quarter was a challenging period for O-I. Earnings fell short of management’s guidance as sales volumes were essentially flat with last year compared to our expectation of modest growth. Despite encouraging demand trends in April and May, June shipments were softer than anticipated including the impact of extreme weather conditions in Europe,” said Andres Lopez, CEO. “We also incurred higher than expected costs in the Americas related to the commissioning of a furnace at a joint venture as well as unplanned downtime due to flooding and weather-related issues. While 2019 is turning out to be a difficult year, we believe many of these factors are temporary and we are taking action to accelerate performance.”
For the second quarter 2019, earnings from continuing operations were $0.42 per share (diluted), compared with $0.31 per share (diluted) in 2018. Excluding certain items management considers not representative of ongoing operations, adjusted earnings[1] were $0.69 per share, compared with $0.77 per share in 2018.
Net sales were $1.8 billion, essentially flat with the prior year second quarter. Higher prices were offset by unfavorable foreign currency translation while sales volumes were essentially flat with the prior year.
Earnings from continuing operations before income taxes were $98 million, compared to $78 million in the second quarter of 2018. This improvement reflects lower restructuring charges in the second quarter of 2019 than in the prior year.
Segment operating profit1 was $236 million which compares to $255 million in the second quarter of 2018. While the benefit of higher selling prices more than offset cost inflation, operating costs were higher than the prior year. Increased costs reflected additional costs related to the commissioning of a furnace at a joint venture, unexpected weather related downtime and timing of an energy credit.
Despite a challenging second quarter, O-I recently achieved key milestones across a number of strategic priorities:
Sales volume growth was strong in the markets where O-I recently commissioned new capacity including Brazil, Colombia and China.
Production of commercial ware at the Company’s first MAGMA line started in early July.
The acquisition of Nueva Fábrica Nacional de Vidrio, S. de R.L. de C.V. (“Nueva Fanal”) was completed at the end of June and is supported by a long-term customer supply agreement. Nueva Fanal is expected to be immediately accretive to earnings.
The Company refinanced its Bank Credit Agreement to improve financial flexibility and reduce future interest expense.
On July 31, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on September 16, 2019, to stockholders of record as of the close of business on August 30, 2019.
O-I has revised its full year 2019 earnings guidance and now expects 2019 adjusted earnings of approximately $2.40 – $2.55 per share. The Company also now expects its cash provided by continuing operating activities for 2019 to be in the range of $550 to $575 million and adjusted free cash flow of at least $260 million for 2019.
Source: Company Press Release.