Avery Dennison Corporation announced
preliminary, unaudited results for its second quarter ended June 28, 2014. All
non-GAAP financial measures referenced in this document are reconciled to GAAP
in the attached tables. Unless otherwise indicated, the discussion of the
company’s results is focused on its continuing operations, and comparisons are
to the same period in the prior year.
“Second quarter results were in line with
our overall expectations for both sales and earnings,” said Dean Scarborough,
Avery Dennison chairman, president and CEO.
“Pressure-sensitive Materials delivered
better-than-expected sales growth, driven by strong volume growth inEurope and
the emerging markets. Adjusted operating margin was back above 10 percent,
within our long-term target range, and we are on track with our consolidation
of operations in Europe,” Scarborough added. “While sales were down modestly
for Retail Branding and Information Solutions, reflecting soft market
conditions in the U.S., the RBIS team continued to make solid progress against
its long-term margin improvement goal, and reported another quarter of strong
earnings growth.
Pressure-sensitive Materials (PSM)
- PSM segment sales increased approximately 6 percent. Within the segment, Label and Packaging Materials sales increased mid-single digits. Combined sales for Graphics, Reflective, and Performance Tapes increased low double digits.
- Operating margin declined 320 basis points to 7.3 percent primarily due to higher restructuring costs. Adjusted operating margin declined 60 basis points as higher employee-related expenses and the impact of changes in product mix more than offset the benefit of higher volume and productivity initiatives. Transition costs related to the restructuring actions in Europe impacted results by 25 basis points in the quarter.
Retail Branding and Information Solutions
(RBIS)
- RBIS segment sales decreased approximately 1 percent, with increased demand from Europe-based retailers and brands more than offset by decreased demand from U.S.-based retailers and brands.
- Operating margin increased 120 basis points to 6.8 percent as the benefit of productivity initiatives more than offset higher employee-related expenses and the impact of lower volume. Adjusted operating margin improved 110 basis points.
